Why do these failed paradises exist in Hong Kong?

Updated 13th April 2017
Why do these failed paradises exist in Hong Kong?
Written by Andrea Lo, CNN
Setting foot onto Sea Ranch, it's hard to believe that this beautiful beachside development is only an hour by boat from Hong Kong's Island's zinging financial district. Nestled on the southern coast of Lantau -- the largest outlying island in Hong Kong -- these spacious homes were designed to form an idyllic millionaire's village.
But that dream failed.
In previous decades, when occupancy was at a nadir, Sea Ranch was described by some as having a post apocalyptic atmosphere. Still today, there are no shops, restaurants, or medical facilities. The last ferry shuttling residents out of the complex departs at 10:15 pm on a weeknight. There isn't even a road link.
But in Hong Kong, Sea Ranch isn't alone. There are similar failed "paradises" -- remote ocean-side communities offering space, peace and lowers rents which simply have failed to attract residents -- across the special administrative region of China.
In a city where urban housing costs on average $1,578 per square foot, why have people been so reluctant to commute to more idyllic, spacious surrounds?

A millionaire's paradise

The idyllic entrance to the Sea Ranch complex.
Unveiled in 1979, Sea Ranch was built with Hong Kong's corporate senior executives in mind.
The 200 units had access to a helipad, private clubhouse, watersport facilities, restaurants, and a high-speed direct boat service to Hong Kong Island.
"Sea Ranch was built as an exclusive millionaires' paradise, to very high standards," says Richard Harris, whose father -- a UK native who arrived in 1970 to work as a professor of political science at the University of Hong Kong -- was among the first to purchase a property there.
Harris says his father paid about $38,642 -- "cheap even then" -- for an apartment of 1,800 square feet (167 square meters).
"It was like a country club. You could sail a boat or canoe from the beach. There was a Chinese restaurant, a Western restaurant, and a coffee shop by the pool, which was the biggest private swimming pool in Hong Kong. My kids learned how to swim in it."
Hong Kong real estate developer Hutchison, which became Hutchison Whampoa in 1980, described the development as "a get-away-from-it-all resort club" in a promotional brochure.
"It is just 45 minutes from Central Hong Kong in the club's own high speed, air-conditioned launch in which you can relax in aircraft-type seats as you are whisked away from the noise and traffic jams of the city," the brochure reads.
"It is a private, completely secure haven where anxieties can be put aside."

Good start

Initially it was a success, and properties sold for between $32,202 and $70,844.
The Sea Ranch's apartments all offer ocean views and quick access to the beach.
The Sea Ranch's apartments all offer ocean views and quick access to the beach. Credit: Drew de Caro
"It's difficult to know how many people lived there but Hutchison would have sold them all," Harris tells CNN.
The Sea Ranch's success didn't last long.
While it was popular on weekends, it didn't attract enough interest overall which heavily affected operating costs, according to an annual report published in 1980 by Hutchison Whampoa seen by CNN.
"Today's billionaires would have all bought into it as a cool place to live. But then they got bored with it," Harris says.
Some people started selling off the apartments, he adds.
By 1983, the development was crippled by a $901,185 debt, according to local media reports. Hutchison sold the holding company that managed the facilities to the residents, but internal disagreements ensued and a rival holding company was formed by a breakaway group.
Conflict between the two entities culminated in a legal battle in the late 90s, resulting in the disruption of club house and ferry services and plunging the complex into chaos, until one group eventually gained majority management rights.
The Sea Ranch's dried up pool today.

Island living

Although Hong Kong covers 427 square miles (1,106 square kilometers) and features 263 outlying islands, much of its population has in recent history been concentrated on a small strip of land along Hong Kong Island's northern coastline and in Kowloon.
"There are various reasons why more rural areas are less popular," Stella Abraham, head of residential and relocation services at real estate investment management firm Jones Lang LaSalle's Hong Kong office, tells CNN.
"The majority of people living in Hong Kong have long working hours, so a shorter commute is preferable -- it gets them home quicker at the end of the day."
Consequently, persuading people to move further afield, accepting longer commutes for bigger, cheaper living spaces, has often proved hard.
On Hong Kong's third largest outlying island Lamma, accessible via a 25-minute ferry from Hong Kong's central business district, a sprawling luxury development called Lamma 1 (below) sits empty.
Occupying 42,194 square feet (3,920 square meters) by the waterfront, Lamma 1 was built by Hong Kong-based King Wong Development. Construction costs were estimated at $19.3 million at the outset of the project.
It features 11 luxury villas ranging between 385 and 2,600 square feet (36 to 242 square meters) in size. Each of these boast a garden, a luxury in Hong Kong where high-rise living makes even a balcony a privilege.
The complex had a 58-feet (18-meter) infinity pool and gym, and there would have been a private ferry service to and from the main island, taking under 30 minutes. It didn't, however, have a road link to Hong Kong Island, or Kowloon.
The abandoned Lamma 1 on Lamma Island.
King Wong obtained an "occupation permit" -- proof the government is satisfied that a development has been constructed in accordance with Hong Kong regulations -- in 2007. By 2010 it was near completion.
Yet neighboring residents on the island say that the development has been abandoned.
Developer Bobby Li of King Wong declined to comment on the project when contacted by CNN.
"The issue here is with Lamma 1's accessibility -- its main transportation is by boat," Simon Lee, a senior regional business director at Hong Kong real estate firm Centaline, tells CNN. "Many Hong Kong people prefer living somewhere with a road link to the city center.
"Hong Kong's living environment is vastly different to those overseas," he explains, comparing the city to London and New York, for example. "In places abroad, there are people who really enjoy living in very quiet places.
"Hong Kong is much more of a lively place, where the difference between somewhere that is accessible by car versus somewhere that is not, is huge."

Successful models

Yet not all remote residences in Hong Kong have failed.
In fact, with the right mix of luxury, marketing and good transport links they can be wildly successful.
Discovery Bay (DB) is perhaps one of the greatest examples.
Located just 11 miles (17.2 kilometers) from Sea Ranch, also on Lantau, DB is a 2.5-square mile (6.5-square kilometer) development, with over 8,000 units ranging from luxury detached houses to low-rise apartments and high-rise towers.
Opened in 1982, it has private membership clubs, a golf course, its own beach, and a 25-minute ferry link to Central that runs every 30 minutes.
In 2011, it had a population of 12,258 people, according to Hong Kong's most recent census.
While DB boasts road links to central Hong Kong, only vehicles with special permits -- such as delivery trucks -- are permitted within the development. Private cars are banned.
Golf carts have consequently become the ultimate status symbol, with just 490 allowed on site. In 2011 an E-Z-GO model cart sold for a jaw-dropping $276,839 -- more than some Ferrari models.
"To buy a golf cart here, you need to own a property in DB and register (the vehicle) under that address," Meeta Nayar, a property consultant at DB real estate agency Headland Homes, tells CNN. "When you sell your property you can sell the golf cart either with it or separately.
"Someone who doesn't own a DB property can rent one, as many tenants who reside here do."
The Park Island estate on Ma Wan is linked to neigboring islands via the Tsing Ma Bridge, pictured in this photo.
The Park Island estate on Ma Wan is linked to neigboring islands via the Tsing Ma Bridge, pictured in this photo. Credit: JEROME FAVRE/EPA
Meanwhile, Park Island, a residential estate built on the island of Ma Wan, has also been a success.
It has the distinction of a road link to both Lantau and the neighboring island Tsing Yi. As of 2015 it had a population of 15,126, according to the District Council.
In February 2017 the average cost of a property per square foot in DB and Park Island was $1,076 and $1,378 respectively.

Why did DB work?

So why did DB work while Sea Ranch and Lamma 1 failed?
"Schools were constructed there, along with other public facilities to suit the needs of residents. That began to build up the DB community," Abraham tells CNN.
DB was also better connected.
"The transportation to and from DB, as well as Park Island, is very comprehensive ... there are frequent bus transfers to the nearest MTR (Mass Transit Rail) stations," Abraham adds.
Many Hong Kong people prefer living somewhere with a road link to the city center.
Simon Lee, Centaline senior regional business director
"Places like DB and Park Island ... also have road access to downtown. That's where they stand out," Lee tells CNN.
Sea Ranch is a "very difficult place to get in and out of," he says. Today a 20-minute private ferry shuttles Sea Ranch residents to and from Cheung Chau, a neighboring outlying island.
From there, residents take a 40-minute ferry to Central on Hong Kong Island.
"During Hong Kong summers we tend to get tropical rainstorms. If the only link you had to the city was via water then you basically can't leave."
"I also have a lot of clients who are particularly concerned about things like going to the doctor," he adds. "Many of them ask, 'Where's the nearest clinic to this property? How long does it take to get to the closest hospital?'"

The rebirth of a paradise?

Over the past decade, Hong Kong's property market has surged. Between 2008 and 2013, property prices have rocketed by 134%, according to the Global Property Guide.
As a consequence, Sea Ranch has in recent years seen something of a resurgence with 145 residents now on site -- over 70% occupancy, according to Drew de Caro, a Hong Kong-based pilot who has lived at the development full-time since 2009.
"I think the Sea Ranch is being rediscovered, or even just discovered. People are coming because they see the value in the property from an economic stand point, but more importantly, they come for the natural beauty," de Caro tells CNN.
De Caro owns three units at Sea Ranch. In 2009, he bought his first 1,200 square feet (111 square meters) property for $154,512; a second of the same size in 2011 for $193,136; and a third, of 660 square feet (61 square meters), for $72,362 in 2013.
"The prices are less than you would find in (Hong Kong Island neighborhoods) Central, Wan Chai or Kennedy Town. You're just getting a lot more space for your dollar," he tells CNN. "(Prices) are increasing. According to valuations, my properties have increased from $154,547 to $528,034," he says.
As well as having become a good investment, Sea Ranch has attracted an eclectic community.
"We have professional people, sales people, pilots, bankers," de Caro says.
"It might be rude to say this, but what has happened over time is that quite a lot of eccentrics have gone there," Harris tells CNN.
"People who want to do something different."