A Real Estate Question: Why Are There No Cruise Ships In Hong Kong?
Thanks to its special status, the city of Hong Kong is a giant real estate bubble that will never burst because it has somewhat of a guaranteed existence.
There are only two reasons why the real estate market in Hong Kong might go back to normal. The first would be to build a gigantic skyscraper with roughly 1 million apartments and the second is that Mainland China becomes a place with high legal standards. As long as none of this happens, capital from all over mighty China will just go on floating into that little place which used to be a British colony.
Both scenarios are quite unlikely, which also counts for a possible drying-up of the Chinese capital outflow. That is why the boom will go on and on.
But there are not only winners in this deal. The working and middle classes have to live in tiny, shoe-box sized apartments. For a one room apartment in an old building you pay around 4.000 US-Dollar and it seems to be per month. Imagine this with a wife and children on an average income. Too many in the lower class don't even have their own apartment. They do live in small cages with the only difference to animals being that the door is open and they don't get fed.
This is not just a sad situation for too many people in Hong Kong, but also a great business opportunity, as I think.
Hong Kong Has A Lot Of Coast Line - Why Not Lining Up Apartment Ships?
Just think of it. A used cruise ship for more than 800 passengers and suited for the high seas travel costs you 50 million Dollar. That is a lot of money, but it looks like a brand new ship. I am sure there are older models for less money (but with the same space and offering the same quality)..
Per head this ship costs around 60,000 Dollar, which is even by normal (inner city) rent standards really cheap. If you write down the value of this ship over five years, you get a base-rent of 12,000 Dollar or 1,000 Dollar per month (all in US Dollar).
Again: This is extremely cheap.
Of course the bill also comes for the used electricity, the heating - or more the cooling in tropical Hong Kong - and the maintenance for the ship, which means the janitor and a captain just in case of. On top of that the ship needs its own landing stage which on the land side needs to be connected to the road-grid and other public supply grids. Last but not least comes the interest for the investment.
I would say, over-all the total cost does not be more than twice the base-rent.
Considering the alternatives, that is still very cheap.
It Doesn't Have To Be A Full-Blown Cruise Ship
A cruise ship has many features that aren't needed on a ship that is supposed to be stationary. The engine doesn't have to be strong, there is no need for storage or a grand dining room or a service crew and since it won't see much of the high seas it doesn't need all the safety features modern cruise ships have except maybe a few basic ones.
It also doesn't have to resemble a cruise ship, but it can also look like a container ship - or be a container ship.
The great advantage of container ships is that they are much bigger and they are not optimized for the vacation feeling but for storage space. An apartment ship for Hong Kong would need the latter more than the other. Therefore, the transformation of a container ship into an apartment ship seems to be the better option and also the cheaper one, because container ships are mass produced and therefore relatively cheap.
Modern container ships can transport several thousand containers which means you can easily give every inhabitant an average space of three containers and still run the ship profitably.,
As apartments on the ship, you can use standardized living containers. Since the ship is normed for them and the living containers themselves usually are modularized, it is quite simple to transform a container ship and equip it with container apartments. These living containers are not just cheap, but also surprisingly comfortable with all normal apartment features pre-installed.
The combination of an empty container ship with container apartments build on it might be the killer application, Hong Kong needs to solve its problems in the real estate sector.
While The Situation For the Poor And The Working Class Improves, The Market On Land Probably Wouldn't Even Be Influenced
Too many apartments in Hong Kong are empty, because Mainland Chinese see the city as save haven and bring their money there to invest it into real estate. If someone lives in it or not is less important than the fact that the money is stored away from the Chinese authorities. This is the reason why it won't matter too much, when for example suddenly 60.000 citizens decide to move on a ship. The pressure coming from the north is just too strong. Even if Hong Kong was empty, the bonanza would go on.
Assuming one container ship has a capacity of 6,000 containers and everyone gets space for two containers (plus one for free space and paths on the ship), one ship could house up to 2,000 individuals. Everyone would have space of around 30 square meter. This is of course less than the example I linked above which is about twice as big, but you also have to pay by far more for it..
Per container, a container ship costs about 4,000 Dollar which is with 3 containers per head only about 20% of what a cruise ship costs. Even with the necessary adaptations and a living container price of another 4,000 Dollar, the container ship solution is still only have as expensive as a cruise ship. ,
In comparison to that, the price and price value of every apartment on land just pales. For working class families, a container apartment would definitively be a great upgrade.
Where Should All Those Ships Be Parked?
Well, there are more than enough bays and there are enough installations nearby which make it simple to add a landing stage and everything else needed for the apartment ships.
Overall, I would say the situation for around 5% of the cities population or about 350,000 citizens could be improved with that. Half of them move on the ships (especially families with children) and the other half has twice the space in the apartments on land. This would require about 60-80 container ships for which there should be enough space in the bays around the city.
Bottom line is: I think this is a no-brainer of an investment and if I had the necessary cash, I would immediately go to the authorities in Hong Kong and ask for their conditions.
"Why Not Line Up Apartment Ships?" I don't know how this would work out when the next major typhoon hits the place. Nice idea, though.
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Nice post. Thanks for sharing!