Why Shit in Hong Kong Costs So Damned Much
Posted by SpikeDec 22
It’s the real estate, baby.
SCMP reports this morning that the Emperor Group has just paid HK$843 million to purchase a shop at 6-8 Canton Road in TST. That’s US$109.6 million. The shop measures 1,212 square feet. That works out to HK$695,544 or US$90,420 per square foot. And Emperor Group in turn leases the shop out to one of its “sister” companies, Emperor Watch & Jewellery, at a monthly rent of HK$1.4 million.
The SCMP says, “”Canton Road is a prime location for local shoppers, mainland and overseas tourists,” the source said. “The west of the street is either controlled by Wharf (Holdings) or Sino Land.”
(Wharf, formerly the Hongkong And Kowloon Wharf and Godown Company, also owns Star Ferry, Hongkong Tramways, i-Cable, Wharf T&T, Modern Terminals. Their real estate holdings include Times Square and Harbour City. The majority owner of Wharf is Wheelock, which was originally Shanghai Tug and Lighter Company.)
The original owner of the shop bought 6 Canton Road in 1986 for HK$5.3 million and 8 Canton Road in 1994 for $32.3 million; not a bad return on investment. The SCMP also reports that a money changer on Cannon Street is currently paying HK$170,000 monthly rent for a 95 square foot shop.
The SCMP goes on to report, “Agents said retail tenants were paying high rents for shops because of the high turnover of business on the street.”
Right. It’s a high turnover because the rents are so fucking high and idiots rent those spaces and then find out that even with gouging customers they can’t earn enough to pay the rent and close up shop. The cost of starting a retail business is out of reach for most people and naturally these high rents get factored into the cost of goods sold from these shops.
Hong Kong is basically owned by about six companies. Their goal is to ensure that Hong Kong does well enough to keep lining their pockets with cash but not well enough to ever offer them effective competition.
5 comments
Comment by Funster on December 22, 2009 at 2:33 pm
Nothing new .
Long term Hong Kong is screwed, it will become less & less competitive & the quality of living will decrease.
Folks in Hong Kong are too easily pacified by the status quo, it doesn’t matter whether its the Govt or the tycoons screwing them.
Nothing is going to change so its best to keep stashing away the money until its time to leave & move somewhere with a future & better lifestyle.
Pingback by What Am I Missing Here? | Hongkie Town on December 22, 2009 at 8:45 pm
[...] in bad traffic, nothing to do, thinking back to this post from earlier today. I admit I never studied economics in college and I don’t have an MBA [...]
Comment by Virgil Tibbs on December 23, 2009 at 2:37 pm
Quality of life HAS decreased. Tom Holland recently had a good column showing how median income here used to be way above many Western countries, but is now far below. I think it’s decreased in real terms, too.
People tell me that HK was a much better place to live in 10 years ago. The government has to do something about pollution, land use, public space, overcrowding, traffic and competition. All of these are fixable, but there’s simply no political will to do so.
Letting in 50,000 mostly unskilled mainlanders every year and flooding the place with tourists is really screwing up HK.
Comment by Virgil Tibbs on December 23, 2009 at 2:37 pm
Oh, and didn’t a French company buy the tram business? Veolia or something.
Comment by Spike on December 23, 2009 at 2:40 pm
They bought a big chunk of it but I think Wharf still owns a piece.