Hong Kong is one of the most competitive real estate markets on earth. Financial Secretary John Tsang told the New York Times that property prices had risen by 120% since 2008. Obviously, that hasn’t been matched by an increase in income anywhere, let alone in Hong Kong, so while expatriates might be in a stronger buying position than natives, they are still priced out of the market. If you want a Hong Kong apartment, you don’t stand a ghost of a chance – unless you’re willing to share with a ghost.
That’s because Hong Kong’s residents are Chinese enough to share that country’s abiding fear of the supernatural. Where else in the world is there a word for ‘a house haunted by the ghost of a former resident, who has died an unnatural death’?
In Hong Kong, though, ‘hongza’ means just that. Hongza sell for significantly less on the open market, and one Hong Kong business, Ng Goon Lau, has made a career and a modest fortune, in buying hongza at a discount and letting or reselling, often to expatriates desperate for accommodation and less superstitious than Hong Kong natives.
That’s not hard. Other cultures have two-or three day festivities, or a Day of the Dead; in Hong Kong, an entire month is devoted to the Hungry Ghost Festival. Every summer, spirits are believed to visit the city and need to be fed and entertained. The city’s main daily English-language paper, the South China Morning Post, even hired monks to cleanse the newsroom after staffers reported seeing ghosts in the bathroom. According to Niall Fraser, deputy news editor at the paper, ‘everybody seemed quite happy’ with the result, and the ritual ‘seemed to do the trick’ – the ghosts weren’t seen again.
As a measure of the difference that ghosts can make to Hong Kong people, it’s convincing. But more convincing still are the figures. Mr. Ng said that he usually expected a ‘death discount’ of 15-20%, less if the property was merely adjacent to a funeral home or cemetery, more if a previous occupant had died there in suspicious circumstances. He said the discount could go as high as 33%, a dramatic reduction that assured Mr. Ng a healthy profit margin for several years.
Mr. Ng started in the hongza business when a workman working on Mr. Ng’s own house was killed in an accident. Since that time, he’s segued from his old business, shark fin sales, into the newly profitable haunted-house business. And one thing that helped him was the cash from his old business. Most Hong Kong banks share the same superstitions as the general population and won’t offer any kind of mortgage on hongza.
But there’s been a sharp reduction in his profit margins recently. Mr Ng is shocked: the death discount has dropped to as little as 5%, cutting deeply into his profit margins. The inroads made by other agencies spotting a profitable market, together with the pressure on prices from the market at large, has meant that Mr. Ng was able to purchase only one hongza in 2012. ‘The market is crazy now,’ Mr. Ng says.
The upside is that Mr. Ng, though he must pay more for hongza now, can ask his tenants or buyers to do the same. He hopes to rent hongza at market value now, and expects to continue to make a profit on his haunted houses: ‘they’re still more profitable than shark’s fins,’ he says.
It seems the only thing that can drive Hong Kong people out of a property is ghosts – and the only thing that can drive out the ghosts is a boom!
Photo credits: Timothy via Flickr