City with the most expensive square meter in the world does not know what to do with quarantined properties

Behind the gleaming skyscrapers and multimillion-dollar homes that have made this city the most expensive real estate market in the world lies a much less appealing parallel reality: one of the world’s seemingly most intractable housing crises.

Welcome to Hong Kong, where the average home sells for over a million dollars (about R$5 million) – and even a parking space can reach almost a million – but where more than 200,000 people face waits of at least half a decade for subsidized public housing.

Far below the line of billionaire The Peak and his ultra-exclusive properties that routinely change hands for hundreds of millions of dollars, one in five people live below the poverty line – defined in Hong Kong as 50% of the median monthly family income once well -living – and many call home a cramped subdivided unit or even a hutch in a dilapidated tenement block.

The cause of the problem, according to the city government, is relatively simple: a chronic lack of supply that cannot meet the demand of more than 7 million residents squeezed into some of the most densely populated neighborhoods in the world.

Housing “is at the top of the agenda,” insisted the city’s chief executive, John Lee, in his inaugural address in October, when he pledged to build 30,000 units over the next five years – a promise that follows an order from the central government in Beijing to prioritize to issue.

But critics have long been skeptical of the local government’s reliance on land premiums, sales and taxes, which make up about 20% of its annual revenues.

Critics say this revenue stream provides an incentive to keep supply tight, limiting what can be done to address the problem.

CNN asked the Hong Kong government whether its revenue from land sales and premiums affects its housing policy.

The Department of Development responded that “the government is firmly committed to maintaining a stable and sustained supply of land through a multi-pronged approach to meeting the housing needs and socio-economic development of the community.”

As that debate rages, the recent and abrupt rollout of the city’s tough anti-Covid measures has thrown a curveball into the mix that — according to these same critics — offers a litmus test of the government’s determination to address the problem.

Many are now calling on authorities to repurpose the vast Covid quarantine camps that the city built during the pandemic to isolate hundreds of thousands of people and that currently lie empty and unused.

As Paul Zimmerman, councilor for the southern district of Hong Kong and co-founder of the urban planning advocacy group Designing Hong Kong, put it: “Now the question is: what to do with them?”

Covid hangover and a litmus test

The answer to that question may be less straightforward than it first appears.

The camps were one of Hong Kong’s most controversial anti-Covid measures – along with the world’s longest mask mandate and mandatory hotel isolation periods of up to three weeks – and were contested at the time of their construction not just among those who condemned what they saw as draconian quarantine requirements.

The camps also angered government critics, who said their rapid and expensive construction belied the narrative that Hong Kong’s housing problem was simply intractable.

Hong Kong authorities have not disclosed to the public how much the network of quarantine facilities costs.

But its total pandemic spending bill over the last three years reached $76 billion (about R$396 billion), according to the city’s financial secretary.

A CNN contacted the Office of the Chief Executive, the Department of Security, the Department of Health and the Department of Development about the costs of building and operating these quarantine camps.

Public housing plans are often subject to years of bureaucracy, but in the case of the quarantine camps the government was able to suddenly “find” about 80 hectares of land and build 40,000 prefabricated metal units in a matter of months.

Brian Wong of the local think tank Liber Research Community is among those who question why the government can’t take an equally swift approach and bypass bureaucracy to solve what he himself acknowledges is an urgent housing crisis.

Wong and others argue that the government’s alleged reliance on land revenue risks turning housing into “a structural problem” that cannot be “resolved in any meaningful way”.

“Even if the government wants to make the land accessible, they won’t because there’s too much at stake,” said Wong, who criticizes what he sees as official indecision and inaction that he says undermine municipal management for the poorest people.

He sees the empty camps as decisive proof of the government’s determination to act and has called for the units to be repurposed into social housing, arguing that it would be “very embarrassing if these containers were left empty or wasted”.

A CNN asked the Hong Kong government what it plans to do with the former quarantine camps. He said he would announce his plans “after a decision has been made”.

Small but still desirable

Only three of the eight purpose-built quarantine and isolation camps were actually used; the remaining five were put on hold as vaccination rates rose and the number of infections dropped.

The largest and perhaps most infamous of the camps is Penny’s Bay, a site near Hong Kong Disneyland, where more than 270,000 people stayed in nearly 10,000 units during its 958 days of operation that ended March 1. Kai Tak Cruise Terminal and a third near a container port.

The rest are scattered along the northern outskirts of the city, close to the border with mainland China.

Measuring approximately 18 m², each unit is approximately the size of a parking space and contains a simple bathroom, shower and bed. Only a few have kitchens.

Still, even though the units are spartan, many argue they can still offer an attractive temporary solution for those who can’t afford the city’s high rents.

In Hong Kong, according to data compiled by real estate agency Centaline, even “nano-flats” measuring 19 m² were recently sold for up to US$445,000 (about R$2.3 million) – the equivalent of more than US$ 2,000 (about R$ 10,000) per square meter.

Francis Law, who was deployed to Penny’s Bay in late 2022, said that while simple, the facilities were adequate to meet a person’s basic needs and would offer an attractive temporary option for those on public housing listings.

“If the government rents the units for around US$254 (about R$1,325) to US$382 (about R$1,994) and arranges a bus route to the nearest train station, I think that would attract a lot of people. candidates, even if it’s far from the main central business district,” he told CNN .

While some of the camps were built on land owned by local tycoons and loaned to the government, some argue that because the units are modular and relatively easily collapsible, they could be moved to more permanent locations – if the government wanted to.

“Obviously, we have land in Hong Kong, we have a lot of rural areas. Our Hong Kong Foundation think tank.

“The key is whether the government really streamlines its procedures.”

Be creative

Others have more creative suggestions, drawing inspiration from how some of the units were temporarily repurposed during the pandemic lulls.

At one point, some of the Penny’s Bay units were used to conduct an entrance exam for high school students who were close contacts of infected cases; at another time, the camp hosted a small electoral voting section.

Hong Kong-based architect Marco Siu is part of a group calling for the Penny’s Bay blocks to be turned into a temporary health and wellness centre, arguing that doing so would only require a minimal redesign and give authorities the option of reopen it in case another outbreak happens.

Zimmerman of Designing Hong Kong said the land adjacent to Disneyland could be used to expand the theme park or be repurposed into a new city.

Whether the government will heed any of these suggestions remains to be seen. Until now, he had kept his mouth shut about his intentions.

A spokesperson told CNN that “detailed analysis and study will be conducted with relevant government departments and departments. Future plans and arrangements will be announced after a decision has been made.”

However, a spokesperson for the Department of Development added that the units at Penny’s Bay and Kai Tak were “structurally designed for a 50-year life cycle” and confirmed that they were designed to be “dismantled, transported and reused in other locations ”.

In a separate statement, the Development Department said the city is committed to a “stable and sustained” supply of land.

“To take a leadership role in land supply, the government has committed to a robust land supply strategy to meet demand and increase the land reserve through a multi-pronged approach, including, for example, the development of two strategic growth areas, namely the new offer of more than 3,000 hectares of land for development in the northern metropolis and the recovery of 1,000 hectares off Kau Yi Chau (island); and accelerating the pace of urban renewal.”

“As announced in the 2023-24 Budget, with regard to land for private housing only, we will secure land on a scale that almost doubles that of the previous five years for the production of no less than 72,000 private housing units in the next five years, and make available the land to market through annual Land Sale Programs and rail real estate developments.”

Still, anyone who watched Penny’s Bay’s closing ceremony earlier this month would have been disappointed if they expected a glimpse of what its future might hold.

As its gates closed, a band played “Auld Lang Syne” and Michael Cheuk, the undersecretary for security, placed a giant jagged padlock on its bars.

“Penny’s Bay Quarantine Camp fulfilled its mission,” Cheuk told the crowd.

Those same words were pasted onto a banner hanging from its closed gates.