The growth in apartments in Hong Kong is very slow, much slower than the growth of the overall population, which grows by about 0.4% per year. Between April 2012 and March 2013, the government sold land worth 50 bio HK$ with a size of 256,167.5 m², an area of about 500 by 500 meters, which is about 1.3 times the size of Victoria Park. Given the size of Hong Kong’s developed area, that estimates to a growth of 0.1%. A city where the population grows four times as fast as the inhabited area is bound to have a serious issue about the affordability of apartments.

Looking south-west from Shek Kip Mei over newly developed West Kowloon.

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They own your supermarket chains, your offices, your apartments. They drive you to work on their streets through their tunnels, serve you their food for lunch, fly you in and out, make sure your stove is hot and your air con is cold.

Hong Kong’s famous tycoons make billions of dollars a year in every niche in the world’s freest economy. Free in this case means free from regulation, but that does not mean free market.
Nowhere else in the world are so many areas of the economy up for grabs. The public transportation system is private, so are most of the tunnels, bridges and highways. Businesses are lowly regulated and the only relevant tax heard of is a 16% income tax.

In a market in which entry is legally so easy, how are the tycoons able to accumulate so much wealth and keep their positions? Is it endemic to a free market that few rule? Or are there other forces at play?

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The Cabs
Though known for its free market, many markets in Hong Kong are actually heavily regulated. One of these markets is the taxi market. There are three different markets, distinguished by the cab’s color scheme. Blue for Lantau, Green for the New Territories and Red for Hong Kong and Kowloon. Although all taxis can go to and from the Airport, only the red Taxis are allowed to freely drive around Hong Kong. The Lantau and New Teritorries taxis must stay within their districts.
Fares are legally fixed and vary between the different colors, with the red cabs being the most expensive. Continue reading →