Traditional Chinese values
HongKongers are obsessed about ‘climbing the property ladder’, i.e. buying a flat. For Chinese people, owning a flat is a rite of passage. Without a flat, one cannot get married and start a family. A flat is a symbol that one is ready to ‘settle down’. This goes down to the very traditional cultural norms of Chinese people – where men are supposed to provide a home for his family. Women will not accept men’s marriage proposals unless he has the ability to provide a home. This goes down to the very patriarchal Confucian values of traditional China.
Land is scarce
Yes, Hong Kong is changing, but those traditional values are so ingrained in our minds that young people continue to dream about buying flats. The 20th century has pushed many rural people into the cities, where land is scarce. This is especially true for Hong Kong, which has one of the highest population densities in the world. As young people come of age, they are finding that it has become harder and harder to buy a flat. Most of the time, it is their parents who help them on their down payment. Others are less lucky.
The conceptual meaning of ownership
Before we analyse any further (such as the trend of the property market), let me explain the concept of ownership (and hopefully I won’t bore you to death). The concept of owning something is very abstract. In life, I say that no one truly owns anything except our own bodies. Even then, it is a philosophical question. Thus, the concept of ownership is very intangible. Say, you walk on the beach and find a nice looking rock. You pick it up, and it’s yours. This is like the English idiom of “finders, keepers.” If you find something that no one claims to own, it’s yours. Ownership is relative. You have a better “right” to that rock than anyone else in this world because you’re holding it.
Imperialism and the scramble for land
How does this concept translate into land ownership? Let me give an example – under classical Roman Law, the concept of terra nullius justified governments to acquire land which was apparently not subject to any “sovereign state.” Based on this concept, governments scrambled to annex new lands and colonies by simply planting their flags on it. Of course, these governments ignored the many indigenous peoples and took their land because they deemed the natives as “barbarians” who are incapable of governing themselves. Many commonwealth countries (e.g. Canada, Australia, New Zealand, etc.) were ceded under this principle.
We are never really owning our land
Before 1997, all land of Hong Kong was owned by the Queen of England after Hong Kong and Kowloon were ceded to the UK through the Opium Wars (with the exception of New Territories which was leased from the Qing Dynasty in 1898 for 99 years). In 1997, the sovereignty of Hong Kong was transferred to China. The Basic Law provides that all land in Hong Kong is owned by the state (i.e. China) with the Government of Hong Kong acting as its administrator. Thus, all land is now really owned by the Chinese government and the most we can get is a government lease. When we “buy” land, we are really buying a part of a lease which normally ends around 2047 (the end of the Basic Law).
An apartment is some space in the air
Most of us don’t have the money to buy a piece of land. At most, we may buy apartments, or even an office space. These spaces exist on top of the land as some “air space”. We are literally suspended in mid air! How are these intangible spaces defined? Lawyers call this an interest in shares of a lease. A lease on a piece of land is further divided into shares. Let’s just say a building has 100 apartments. The lease may be divided into 100 shares, and each “owner” of an apartment gets 1 share of the lease, with a right to “exclusively possess” his apartment. Note the word “possession” – it is not ownership. It is possession – meaning a right to use and control – only.
What happens after the lease expires?
What will happen after the Basic Law expires in 2047 and most of our government leases also expire? No one knows. Last time, when most government leases was to expire in 1997, HongKongers’ worries led Margaret Thatcher to meet with Deng Xiaoping to negotiate the terms of the Joint Declaration, the foundation of the Basic Law which provides for Hong Kong’s future after 1997. As 2047 is approaching, this is something we should keep in mind as we think about buying property in Hong Kong. Essentially, buying property is buying into the future. We buy property because we have faith in Hong Kong’s future development.
Buying a property in Hong Kong really means hedging our bets on Hong Kong’s future. Even though we don’t think much about it, we buy land because we assume our land will increase in value in the long run. This is a long-term investment, and requires that we believe that our society will continue to prosper materially. Once you become a homeowner, there is nothing more you fear than a market crash and lose ‘everything.’ What you can see is that we are all in the same boat. So, whether you like it or not, we are all in this together to build a better future for Hong Kong.