I have a copy of Extraordinary Popular Delusions and the Madness of Crowds. (Get yours for free here.) It came out in 1841, the same year the UK took Hong Kong Island, but if he were around today, author Charles Mackay would surely mention the Big Lychee’s latter-day tulip manias. To quote from Amazon’s review of the book: “Why do otherwise intelligent individuals form seething masses of idiocy when they engage in collective action? Why do financially sensible people jump lemming-like into hare-brained speculative frenzies…?” To which we can add: who seriously thinks a car parking space in the little patch of paradise that is Tai Wai can be worth HK$1.3 million?
The Standard’s story leaves us in little doubt that the bubble du jour is car spaces. But you have to wonder: is the tycoon-owned and tycoon-friendly paper reporting a bubble, or simply urging one on? The report is about one (allegedly Nazi-managed) development by Li Ka-shing’s Cheung Kong group. It looks rather as if, deprived of money-laundering Mainland customers by Hong Kong’s property market cooling measures, the company is applying its apartment-selling tactics to humble parking spaces – which developers have traditionally seen as a source of rental income. Drip-feed units onto the market, while a cooperative media quote real-estate agents’ tales not only of instant profits, but of rental yields that still look enticing. (The project is atop an MTR depot, so there may be fewer parking slots than in sites farther from the railway. The developer says only residents can buy these car parking spaces, though that doesn’t seem to be affecting this mini-mania.)
The other developers will, as always, imitate the master. And, if a real bubble is to take place, speculators obsessed with quick, easy returns will take the bait. Some of them will not be lemmings at all, but seasoned lemming psychologists, calculating that if you get in soon enough and the developers, agencies and media do their hype thing, idiots afraid of ‘losing out’ will join in the rush. (Seriously: how much hot Mainland money is really flooding into parking spaces?)
The extra taxes recently imposed to cool the market apply only to residential units. With mortgages available for parking slots, this craze will be open to all, or at least anyone who can scrape a few hundred thousand Hong Kong bucks together; if past bubbles are any guide, families will pool their savings. The Hong Kong Monetary Policy sees no need to worry because the parking-space market is not big enough to affect the banking system, and the assets being traded are not a necessity or politically sensitive.
If a bubble really takes place and thousands of HK$1 million dollar-plus parking slots start changing hands, some people will end up holding what had been some horribly overpriced little oblongs of concrete.
Mackay’s book did not address only financial bubbles, but other forms of collective insanity, such as the rush of Medieval peasants to join the crusades and outbreaks of witch-burning. Maybe because he was Scottish, he neglected one of the worst forms of communal mental disease: golf. There is something tragic about using up hours walking around a field in funny pink or yellow clothes hitting a little ball with a stick. When a whole segment of society is addicted to it, it gets scary.
Environmental activists Green Sense have a refreshingly bold suggestion (not their first): develop the Fanling golf course into housing for 100,000 people. Amusingly, they promise that a team of young architects are working on a blueprint. The Hong Kong Golf Club’s boss is alarmed enough to say “Hong Kong must have its own course as an international city to attract investors to visit,” which tells us something about how golf damages its victims’ sense of reality.*
Critics could point out that if Hong Kong actually has a surplus of housing, thanks to all the empty apartments out there, it would not make ‘green sense’ to build more. But the activists still have a point. This is a government-owned, 170-hectare space that could be used for all sorts of useful purposes: for example, you could get 50,000 7-Elevens in that area, and still have room for the world’s biggest columbarium.
Golfers are 30 times more likely than the rest of us to be struck by lightning. It is the only interesting thing about them. Everything else you need to know about their illness is here. What they need is not help so much as drastic, cold-turkey-style intervention, and Green Sense surely point the way to a humanitarian solution to this affliction.
* Hong Kong is a net outbound investor and does not need to seek inward investment; any investor who will not look at a possible location unless it has a golf course will probably not allocate capital efficiently; if these investors are only ‘visitors’, we have enough already, thanks.