The end is nigh

Irreplaceable, not indestructible

Over the years Chungking Mansions has been all things to those who crossed its threshold. A gangland slum, a high-end palace, a curry mecca. Pot of gold however, may not be its most recognised identity.

The 55-year-old structure, with its dozens of businesses and heaving eateries, has long been a meeting place for the wealthy, the needy and everyone in between. It has given asylum seekers, Chinese immigrants, westerners and even the unaccustomed Hongkonger their first taste of the grit of this vibrant city.

But unfortunately for this place, which is steeped in nostalgia and cultural significance, its days are numbered.

Management says that it may only take another economic downturn similar to that of the late 1990s to create conditions that favour developers. And while goodwill and good balance sheets keep this place running, it is simply rare for a building to last so long especially with the pressures of time and the moist sea air weighing heavily on its foundations.

Architect and Hong Kong University professor Dr Lee Ho-yin says reinforced concrete buildings over 50 years old can suffer from water damage that can weaken and corrode the steel and cause cracking in the concrete.

At Chungking Mansions, work has been done to repair its cracking concrete in order to extend the building’s lifespan.

“It was the main target of the work, to maintain it and make it last for longer,” says Dennis Cheung Ka-yuen, a representative of the building management.

But the repairs are far from being the panacea that Chungking Mansions needs.

“The building is 55 years old now, I think after ten years the building may be torn down because of structural problems,” says Cheung, adding that the building’s maze-like layout is also contributing to its congestion and, inevitably, its destruction.

“It’s a tall building, it consists of 17 floors. Just by common sense it cannot last for too long, it cannot last for hundreds of years.”

The obvious answer may seem to be to move on, but countering pressures like expanding maintenance costs are restrictive building rules and the common sense equation that it’s still a place where businesses operate profitably.

Money pot

According to management, some 10,000 people funnel into Chungking’s doors and through its rabbit warren of crowded corridors every day, providing streams of cash for businesses catering to human necessities inside. And there is also the well known international trade in all kinds of goods that is negotiated in the shops.

The building itself is worth billions of dollars, estimated by prior property sales data, and the trade of the businesses, somewhere in the millions.

A conservative estimate of the monetary value of Chungking Mansions is about HK$6.3 billion, but insiders in the property development game say it’s probably worth more.

Just one prominent store on the first floor occupied by Sasa was sold for HK$150 million in 2004, according to lands registry documents, and continues to draw $1.15 million a month in rent for its owners – or $41.4 million over its three year tenancy agreement.

From little rooms, big profits

A guesthouse running 20 tiny single rooms could charge anywhere up from $300 a night per room, or potentially earn more than HK$2.2 million in revenue a year, and larger rooms take a premium.

The Post spoke to two backpackers who shared a windowless single room with a bunk bed and were paying $350 each a night. Given that $2.2 million a year would offer more than $183,000 a month, the rent of guesthouse at about $29,000 a month forms a small fraction of the costs - for established owner/operators the profits are that much higher.

Staying makes sense

Considering the entire ecosystem of Chungking Mansions, it still proves to be a tidy earner for landlords and businesses operating there. Rents at Chungking Mansions are competitive, with some apartments around $30 a square foot in the prime position at the southern end of Nathan Road – cheap but on the high side for such an old building perhaps reflecting its location rather than its condition.

Flats there are tightly held, transaction histories published by Midland Property and show three sales in 2016 and another eight since 2006, with their prices comparable to new apartments in Hong Kong.

Tidy profits have created goodwill among most owners, but some outliers campaign for a sell-out.

“Actually most of the owners are willing to keep it running, because they are earning profits from the building,” Cheung says.

“But for the other side, it’s not a big group, they might own the unit or a shop but they can’t rent it out, they might come to the office and reflect to us their wish to sell it to a big developer.”

Newer, flashier, shinier and much cheaper, iSquare – across the road from Chungking Mansions – could not be more different. Drag the 360-degree video to see both buildings.
Newer, flashier, shinier and much cheaper, iSquare – across the road from Chungking Mansions – could not be more different. Click here to see the 360-degree video.

To gauge the value of Chungking Mansions, look no further than the 2009 sale of the Hyatt Regency, which used to sit just across Nathan Road before it was transformed into the glass-and-steel iSquare shopping centre.

The sale and construction price for that site, with a floor area of 600,000 square feet, was HK$1.3 billion – about a fifth of Chungking Mansions’ estimated worth.

Home and hearth for a growing city

Dr Lee Ho-yin

Designed in the late 1950s, Chungking Mansions replaced the Chungking Arcade, a street-level market selling electronics and other goods, according to its official history.

It was the first of its kind in Kowloon, towering 17 storeys above the ‘60s landscape.

Bulky monolithic buildings like Chungking Mansions are part of a type called “composite buildings”, which in the post-war decades almost completely replaced the four-storey tong laus which were a hallmark of colonial Hong Kong up to that point, as Dr Lee explained in a recent public lecture at Hong Kong University.

But the tong laus couldn’t house enough people during the rapid post-war migration from mainland China. Between 1947 and 1963 Hong Kong’s population nearly doubled to more than 3.4 million people.

At the time, people were streaming over the border from the mainland and this new building type which was springing up like weeds across the colony had to take up the demand for beds.

Dr Lee explained in his lecture that one of the new features of composite buildings was firstly their height, towering sometimes ten storeys above the old tong laus, and the ownership structure.

Whereas tong lau buildings usually had one or two owners, new composite buildings were designed to be mixed use, incorporating residential flats and businesses throughout the building.

Each apartment was generally sold to an individual.

Only now, as these buildings age, does the fragmented ownership of these buildings become tricky.

With about 650 owners of 920 titles over apartments and shops, a developer would need to secure 80 per cent or 736 titles to ensure redevelopment of Chungking Mansions under rules introduced in 2010 affecting compulsory acquisition of buildings more than 50 years old.

“Many developers are targeting this site, this location,” Cheung says. “So if the operation and the economy goes down the developers may be able to purchase all the ownership and tear down the building and build a new one for profit.”

“It depends on whether it’s profitable, and it depends on the safety of the building.”

“In the late ‘90s when the economy was its worst and building condition was [also at its] worst, developers began approaching owners.”

“It is quite hard now because the ownership is too separate,” he says.

Holding all the cards

The redevelopment of the Chungking Mansions site is almost a certainty. The only questions left to answer are who, when and how?

But like a stubborn horse, not willing to budge, Chungking seems to have a few tricks up its sleeve to keep it from the wrecking ball.

It all adds up to a fortune

The site sits on a roughly 50,000 square foot plot, with 17 floors and a basement not including the disused roof, it makes a building with a usable net floor area of about 900,000 square feet. Reducing the net by a tenth (by excluding common hallways, lifts and stairwells to estimate saleable area), Chungking Mansions may cost as much as HK$8.5 billion to buy, or $6.3 billion, calculating based on prior recent sale prices.

A scan of the four properties at Chungking Mansions advertised for sale online shows the cost per square foot of floorspace is going for about HK$11,000, though actual recent transactions have been knocked down to about HK$7,800 per square foot of saleable area. That’s cheaper than new but still nowhere near the range that would get a developer interested according to a source in the industry.

With an estimated 41,000 composite buildings in Hong Kong to reach 60-years old in the coming years, Chungking Mansions is an expensive prospect in a long list of cheaper options elsewhere.

According to Dr Lee, it could take years before the building’s fate is known.

“A building like Chungking Mansions may take more than 10 years for a developer to acquire sufficient properties for redevelopment, which is the main reason why it has survived,” he says.

Meanwhile, building limitations in place in Kowloon’s south cast even more doubt over the possibilities for future redevelopment.

Building regulations have changed as population pressures of the post-war period have subsided. Hong Kong’s population may be growing at a slower rate than before, but it is still imperative that more people be housed.

A hypothetical new building at the site would need to limit its gross floor area to less than what is currently there, according to an insider who said the main issue that could make it necessary to rebuild at the site would be maintenance costs owing to its age, rather than profit. Developers might then be forced to consider other, less popular and profitable buildings to commit to the wrecking ball.

Nothing lasts forever

Bricks and mortar may be replaced, as they often are in Hong Kong, but the talk of the loss of a world famous icon from the Tsim Sha Tsui scene sparks nostalgia in many. The thought that this cultural hub that has lived nine lives could be replaced with a sparkling mall full of designer brands like much of the rest of Tsim Sha Tsui in the next ten years could fill the same people with dread. But with so many Hong Kong buildings sagging into ruin after half a century of service the Mansions are defended from developers by its fruitful businesses and its popularity.

To countless people it has been the variable dose of comfort they needed as they arrived in Hong Kong, to others it was their road to riches, or a stop along the way. Maybe the building can’t last forever, but as articles in this project explain, Chungking Mansions has already developed an immortal cultural impression.

Higher calling

Follow the money

Chungking Mansions could never be described as the shy, quiet type. The building on Nathan Road in equally bustling TST is in an almost constant state of hyperactivity as people from all over the globe eat at the many restaurants, check in to the many hostels and, of course, trade goods. The ripping sound of tape unfurling from its roll as boxes are packed up for shipment is a common one.

It’s obvious the complex has many roles – a vital trade link to Africa one of them. But ask some merchants from the continent and they say that trade link is weakening, the city’s crown as the world’s hub of Sino-African trade losing its shine over the past two years as a result of tighter visa regulations and surging operating costs.

And as Hong Kong creates more red tape, the mainland has relaxed its borders, prompting Africa-based businessmen who once had the bulk of their import-export businesses based in the former British colony now seeking their fortunes to the north, in cities such as Guangzhou and Yiwu.

Somali Ali Mohamed Ali is one of them. He owns a logistics firm and said his business five years ago was fully based in Hong Kong. Now “90 per cent” of his operations are on the mainland. “I’ve spent the past three years making the shift,” he says.

Ali claims he is the first Somali in the world to hold Chinese citizenship, and he kicked off his Asian venture in Hong Kong in 2002. He spent his first year living at Chungking Mansions, which he considers the city’s heart of Sino-African trade.

Chungking Mansions is a must-stop in Hong Kong for African buyers searching for cheap electronics. Chinese University Professor Gordon Mathews estimated in his 2011 study of the building that up to a fifth of all mobiles used in sub-Saharan Africa have passed through the building’s corridors.

Containers of goods destined for African consumers leave Guangzhou's Nansha port. Photo: SCMP Pictures

The 55-year-old cluster of high-rise towers boasts a traditional appeal to traders from Africa and South Asia and was also seen as cheap. A typical commercial lease for about 100 sq ft in Chungking Mansions costs about HK$30,000 per month, a bargain in a city commanding some the world's most expensive retail rents.

But the building’s first floor, once cluttered with cardboard boxes destined for Africa, has turned quieter than ever before. Whole rows of trading offices have been shuttered. “They’re all gone, heading north to mainland China,” says Tse Siu-hau, a 68-year-old Chinese souvenir shop owner who has been in the building for more than than 15 years.

Adams Bodomo, a professor of African studies with the University of Vienna and a former director of African studies at the University of Hong Kong, confirms the dip. “Clearly African trader numbers are declining in Hong Kong and particularly in Chungking Mansions, compared with, for instance, from 2000 to 2005,” he said.

Ali was among the hundreds of African merchants who relocated their businesses from Chungking Mansions to the so-called “chocolate city” of Guangzhou, a city in the southern Chinese province of Guangdong that is home to the world’s largest overseas African community. They are on the hunt for lower business costs and streamlined access to the origins of their products.

Adams Bodomo

“Everything’s cheaper in Guangzhou,” Ali says. “The food, office and accommodation. We can also to offer business partners more spacious and luxurious hotel rooms at a much lower price.” He added that there was a wider variety of dietary options for Muslims as well as “more authentic African food”.

For decades, a visa was not typically required for visitors to Hong Kong from African countries of British commonwealth origin. But after a wave of visa policy strictures targeting citizens were put in place in 2014, several African businessmen say they were only granted two weeks stay in the city, with no authorisation to cross into the mainland.

Echoing Ali, Bodomo said recent visa restrictions have made it “very hard” for people from Africa, except for South Africans, to obtain visas and make a trip to the city. In comparison, once a trader is able to demonstrate that she has adequate money to buy goods in the mainland for resale in Africa, he or she typically is granted a visa, he added.

Mohammed Ali Diallo

Mohammed Ali Diallo, 39, is a Guinean entrepreneur and president of African Community Hong Kong. He tells the Post the number of businesses have been declining “month after month” either in terms of number of employers or business transactions and turnovers. He adds the pressure may even rise to a point where all may be forced to move out of Chungking Mansions.

Running a firm that sells Chinese electronics to retailers across Africa, Diallo, unlike Ali, relocated his business to Hong Kong from the mainland China five years ago.

“The soaring rents were killing small businesses,” Diallo recalls. He got settled in a shop on Chungking Mansions’ first floor and paid a monthly rent of HK$18,000 before being notified by the landlord of a 27 per cent hike to HK$23,000.

Unable to afford the new rent, Diallo moved to the fourth floor of a building directly opposite the sprawling warren of buildings. Soon after, the rent there also jumped, prompting Diallo to move to a 120-square-foot office on the 13th floor.

He says it is now an opinion “commonly held by African businesses” that they no longer need Hong Kong as an entrepot given Beijing’s efforts to loosen its grip on restricting African merchants’ access to the mainland.

Given that the products they source originated on the mainland, places like Guangzhou and Yiwu are indeed more attractive than Beijing, Bodomo says.

Owusu James from Ghana in West Africa, who owns an African clothing shop at Chungking Mansions. Photo: SCMP Pictures

Trade between China and Africa hit new highs of nearly $200 billion last year, according to official Chinese government statistics, driven by Africans’ demand for cheap electronics and Chinese industry’s appetite for African raw materials.

Mainland ports that Beijing freed up years ago now charge around 20 per cent less than their counterparts in Hong Kong, and their shipping times and costs are comparably more affordable, Ali says.

Both Ali and Diallo forecast a more open business environment on the mainland as boosting the allure of doing business there. Since early 2014, Beijing has rolled out a slew of schemes to streamline customs clearances, with Guangdong province taking the lead in the reforms.

While it has become much easier than before for a foreigner to open a bank account on the mainland, Diallo has found his accounts used for international business transactions are under mounting threats of being shut down by cautious banks citing money-laundering concerns.

In tandem with its customs policy revamp, the mainland authorities’ General Plan for China, namely the Guangdong Pilot Free Trade Zone covering areas in Guangzhou, Shenzhen and Zhuhai, mirrors the structural and legislative framework of the Shanghai Free Trade Zone.

Today, even language barriers are negligible on the mainland, the merchants say, with most of their Chinese business partner demonstrating English proficiency, especially in major cities like Guangzhou. All the same, Bodomo claims many African merchants study the Chinese language, rely on translators or simply resort to "calculator communication".

Still kicking

Way of the hotelier

Many business people have struck gold in Chungking Mansions. Sam Lau is one of them.

Lau, 69, runs a guesthouse in the iconic building in TST and has become a millionaire for his efforts.

But while he has earned the title of successful businessman, it is the title of Wing Chun master that he values most.

Lau spent years learning and teaching alongside one of the discipline’s best, but strayed from its path to seek gold in Chungking Mansions. These days, Lau is focused on promoting Wing Chun – known for its close-range, explosive strikes – as he seeks to have it included as an Olympic sport.

“Korea’s taekwondo and Japan’s judo have already made their appearances in (sic) Olympics for several decades, so why can’t our homegrown kung-fu do the same?” he says.

Lau’s lifelong association with Wing Chun started in the early 1960s, when the 16-year-old Hong Kong boy crossed paths with Chinese martial arts master Yip Man in a Mong Kok barber shop.

Yip Man

“The barber told me that the bald man sitting next to me was a martial arts master, so I asked him whether he would like to teach me,” Lau says. “He then introduced me to one of his disciples.”

Born and raised in Nanhai, Guangdong, Yip migrated to the former British colony after the Communist takeover of 1949 and devoted his life to the popularisation of Wing Chun (Yip would also teach kung-fu legend Bruce Lee).

During the first few months of his Wing Chun enlightenment, Lau says he would deliberately pick fights with “gangster boys” around Kowloon Tong as a way to self-test his learning.

“I was cruel at the time,” Lau remembers.

Yip took Lau under his wing. He took him on as a formal disciple taking him to martial arts courses as a teaching assistant in the late ‘60s and ’70s. Together they founded the Yip Man Martial Arts Athletic Association.

But unlike some of Yip’s other disciples who spent most of their life involved with martial arts, Lau left behind his 10 years of teaching to become a businessman. In 1977 he opened a guesthouse in Chungking Mansions, taking on the jobs of housekeeper, accountant, handyman and security guard.

Sam Lau

"I took that decision to earn a living,” Lau recalls. “It was tough at the beginning, but I started making a profit within a few months."

Lau, who is president of the Hong Kong Guesthouse Association, says in the 1980s, Chungking Mansions was attracting global backpackers, with many guests coming from Europe, Japan and the US.

Fast-forward 20 years and Lau had become something of a tycoon in Chungking Mansions with more than 10 guesthouses to his name. He sold a majority of them a few years ago, a decision he now regrets.

“Chungking Mansions has become much better managed in recent years, which was not what I expected,” he says. But despite being a millionaire, Lau says he prefers to be seen as a Wing Chun master.

As for the future, Lau says he plans to turn his own villa into a Wing Chun temple, where people can practice his martial art and tourists can visit.

“Money is not that important to me at my age.

“I just want to do something meaningful, even something that will not bring any economic benefits. My top priority is to promote Wing Chun, just as my mentor Yip Man did when I was young.”

Now the master and the mentor to some 3000 students, Lau says that foreigners, not Chinese, have proven themselves to be the most passionate and hardworking in the martial arts studio.

Yip Man’s legacy lives on in Kowloon as his son Yip Chun continues to teach kung-fu. Photo: SCMP Pictures

“Wing Chun may be a household name among Chinese, but it is not very widely practiced in China, perhaps even less popular than ... taekwondo.”

Taekwondo, an ancient Korean martial art, which translates to “the way of the foot and fist”, became an official Olympic medal sport in the 2000 Sydney Olympics. Japan’s judo was first included in the 1964 Tokyo Olympics.

“It is a shame.” Lau says about the absence of Chinese martial arts from the Olympics.

“There is no unification of various Chinese martial arts styles. We also need more support from the government, not just various societies, to boost its popularity nationwide.”

Next chapter: Provider