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Hong Kong Housing Situation

Hong Kong cage dwellers - rent soars

Sep 04, 2009

The downturn in Hong Kong's economy is turning into good news for landlords - and bad news for thousands of tenants who sleep in cramped metal cages rather than live on the streets of Asia's most expensive city outside Japan.

The cage homes, which resemble livestock coops, have been a running scandal in Hong Kong's housing market for decades, yet rather than disappear or be legislated out of existence, the number and cost of the accommodation are rising.

About 100,000 tenants are now paying for such squalid living space; at times the cages piled one on top of the other, with rents that can be higher than the amounts the city's sun-and-sea lovers hand over for beautiful spacious settings in the upmarket south of Hong Kong Island.

Cage dwellers are paying up to HK$93.30 (US$12) per square foot, says a report by the Society for Community Organization (SCO), for a space barely big enough for a mattress with wire mesh surrounding it to protect their few possessions. That compares with HK$72-per-square-foot, monthly rent for a four-bedroom, 3,900-square-foot home at Three Bays, a block of luxury flats in the coastal village of Stanley, according to the website of Centaline, a property company.

One cage landlord, surnamed Wong, leases out his 700-square-foot flat to 12 cagemen in Sham Shui Po, an aging urban area on Kowloon, the part of Hong Kong on mainland China. Demand for his cage homes is on the rise, due to the financial crisis, he said.

"The rents are likely to grow as the demand for cage homes is on the increase amidst mounting job losses," said Wong, who is short of sympathy for his tenants' dire circumstances. "The cage homes are better than the streets or living under bridges," he said.

The median rent for a cage has jumped by more than one-third in the past three years, to HK$60 per square foot from HK$44.40 in 2006, according to the SCO, and are up from HK$40 in 2004. Some of that increase has come as average prices in Hong Kong's volatile housing market rose about 25 percent in the eight months to August, according to Centaline.

Demand for cages is growing as the city has bent under the global economic crisis, and as international trade with China and related services, Hong Kong's lifeline to prosperity, have taken a hammering.

Unemployment is running at a four-year high of 5.4 percent, with 203,000 people out of work, compared with 3.5 million holding on to a job.

Hong Kong's economy grew a seasonally adjusted 3.3 percent in the second quarter from the previous three months after four consecutive quarters of contraction, led by export and domestic consumption.

Even so, those green shoots may soon wither. Hong Kong exports fell about 20 percent in July from a year earlier to HK$212.3 billion, after declining 5.4 percent in June. Imports fell 17.8 percent in July from a year earlier, leaving a trade deficit of HK$21.7 billion. Shipments to the United States slumped 29.4 percent, sales to the UK tumbled 30.7 percent, and exports to Germany slid 29 percent.

SCO director Ho Hei-wah said people who live in the cages include the unemployed and low-income individuals such as construction workers, and it is the construction sector where the unemployment rate is the highest, at 11.8 percent in the three months to June. That marks a slight improvement from the 12.1 percent in the March to May period and the 12.7 percent seen from February to April, which could point to an easing of demand for cage homes and the prospect of a fall in rental cost.

But unemployment will remain high for some time, especially with thousands of students entering the job market in August and September, Secretary for Labor and Welfare Matthew Cheung said on August 20.

The monthly rent of a cage at about HK$1,000 to HK$1,500 swallows up to 40 percent of a cage dweller's income, according to the SCO report. For that, cage dwellers have to share toilets - on average one toilet is available for every 10 lodgers - and the most basic of kitchens.

The research covered cage homes and partitioned rooms in decaying districts such as Sham Shui Po, Tai Kok Tsui, and Wan Chai. About 100,000 people live in cage homes, according to the government.

The cage-home scandal is resurfacing in the public domain as the disparity in wealth among Hong Kong residents is widening to alarming levels. Hong Kong has the highest Gini coefficient, a measure of such disparity, among all Asian cities, according to the 2008 Human Development Report by the United Nations. The coefficient rose to 0.533 in 2006, the highest since records began in 1971. The closer a city's score is to zero, the greater the equality of its economy.

The UN-HABITAT report on the "State of the World's Cities 2008/9: Harmonious Cities" gives the urban Gini coefficient of Asian cities at 0.39, slightly below the unacceptable inequality threshold of 0.4.

The increasing wealth gap was brought to the attention of the government in January, when Cheung Kwok-che, a member of the Legislative Council, cited the UN report and the fact that Hong Kong's wealth disparity was "well above the alert level."

Cage people have an alternative, a spokesman of the Housing Department said - they could apply for public housing flats with rents as low as about HK$650. The process might take about three years.

One cage dweller, Cheung, who lives in Sham Shui Po at a monthly rent of about HK$1,300, was dismissive of that choice." In case of emergency, it might take seven to eight months" - a figure also given by the Housing Department for an "emergency" allocation. Even when public flats become available, they "are poor" Cheung said, often where people had just died, or two or more storys up in buildings without lifts.

Yet the cramped and often fetid conditions he endures are appalling.

"I usually hit my head on the wire and sweat in the 33 degrees [Celsius] heat of the past few weeks," said Cheung, who lives on about HK$3,500 a month in government benefits. "The temperature inside the cages can be two to three degrees higher than what they are outside. It's really uncomfortable, and sometimes I cannot sleep until after 5 in the morning."

Cockroaches, wall lizards, lice, and rats are common. "Sometimes I am worried if lizards or cockroaches will crawl into my ears at night," said Cheung.

One-third of Hong Kong's seven million residents live in public housing, in a city that claims to have the most billionaires in Asia, a recent Time magazine report said. Hong Kong is Asia's third-most expensive city, ranking only after Japan's Tokyo and Osaka, according to a 2009 ranking by Forbes. In world terms, it ranked fifth, one notch higher than its March 2008 ranking.

Hong Kong cage dwellers - rent soars

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