Half a year on, the occupancy rate of The Tanner Hill barely hits 12%, despite its prime location and luxurious facilities. The real problem is its lease policy. (Photo credit: Jeni Zhi)
(Chinese original please see here.)
Hong Kong Housing Society’s (HKHS) luxury retirement home The Tanner Hill is a ghost town in the bustling district of North Point. Completed in December 2015, the complex provides 588 flats of areas ranging between 344 and 1,200 square feet. As of end of July, only 72 flats were leased, a staggeringly low occupancy rate of 12%.
Tenants pay a lump sum of HK$4-16 million for an open lease that stands until they die.
The complex is only a block away from the North Point MTR station and is surrounded by shops and restaurants. Most flats in the complex have lush green views of Braemar Hill, while flats on higher floors look over the harbour. Its prime location draws few, however, due to its unattractive lease policy.
For lease only, not for sale
All flats in The Tanner Hill are only for lease – not for sale. Depending on the tenant’s age upon move-in and the area of the flat, tenants pay a lump sum of HK$4-16 million for an open lease that stands until they die.
As an elderly housing complex, The Tanner Hill accepts only applicants who are 60 years old or above. Studio flats can accommodate one tenant, while most other flats can accommodate two. Up to two eligible persons can sign the lease contract jointly, whether they are a married couple, siblings, relatives, or friends; they can be of any relationship to each other.
Each flat can accommodate an extra two to three ‘permitted occupiers’, who could be 50-60 years old spouses, domestic helpers, or immediate members of the family (in-laws do not fall into this category). Temporary visitors can apply for a nonrenewable permit to stay in the complex up to 30 days.
“Many dislike not having full title to the flat.”
The lease policy of The Tanner Hill is modelled after that of HKHS’s public housing estates. Such strict regulations are intended to prevent abuse of public housing, which is considered public property in Hong Kong. Tenants are not allowed to lend or sublet the flat to any persons not registered as an occupier.
This policy, however, is often deemed undesirable by the target customers of The Tanner Hill – the well-off seniors. Harbour Times visited The Tanner Hill as a potential buyer. The sales promoter remarked that many visitors who were interested in the complex prefer purchasing over renting a flat. “Many dislike not having full title to the flat,” the sales promoter said.
As a quasi-non-governmental organisation enjoying favourable government policy, HKHS is subjected to certain constraints and cannot sell its flats like private developers would. As a result, The Tanner Hill is restricted to offer units on a lease only basis.
In order to attract more tenants, The Tanner Hill introduced the short lease. Seniors can rent a flat at The Tanner Hill at a rate of HK$14,000-54,000 per month, renewable after two years. The short lease can be converted to a long lease and up to 12 months of rent can be used for paying part of the lump sum for the long lease as part of the initiative to encourage tenants on short leases to switch to long lease.
The promotional materials for The Tanner Hill indicate that there will be health professionals stationed in the clubhouse. The family medicine centre will be operated by Hong Kong Sanitorium & Hospital (HKSH), while Hong Kong Baptist University School of Chinese Medicine (HKBUCM) will run the Chinese medicine clinic.
However, none of the said services is available at the moment. The sales promoter who led Harbour Times through the complex explained that as the number of tenants is unexpectedly low, HKSH and HKBUCM decided to postpone their plans of setting up clinics in the complex.
Catering facilities are not ready either. Neither the refreshment corner nor the Cantonese restaurant in the clubhouse is open as of the end of July.
All lifts in the complex are equipped with faux leather foldable benches, just in case users need to sit down during their vertical trips. In some of the lifts, though, the benches are still wrapped in plastic packaging or veiled behind transparent acrylic boards. In other words, senior residents cannot sit on them when their legs are sore.
Luckily, some other parts of the clubhouse are up and running, such as the library, gym, game room, and music practice room. Current residents can at least enjoy some of entertainment facilities promised by HKHS.
The back story
“Hong Kong needs this type of housing,”
Abraham Shek Lai-him, LegCo member.
The Tanner Hill was built on the original site of Tanner Hill Estate, an HKHS public housing estate demolished in the nineties. The lot was left vacant for a long period of time, until The Tanner Hill was completed last year.
According to HKHS spokesperson Peter Kuk Kwok-yung (谷國融), HKHS initially planned to build housing for sale under the Home Ownership Scheme. Yet, the government called off the Home Ownership Scheme temporarily in 2000 and so HKHS could not begin construction.
At one point, the government proposed to redevelop the site into another public housing estate, but HKHS recommended building retirement homes instead, since Hong Kong has very few of them. After the negotiation process with Housing Planning and Lands Bureau (now Transport and Housing Bureau) and the Executive Council, HKHS finally acquired permission from the government.
As a QUANGO, HKHS is subjected to certain constraints and cannot sell its flats like private developers would.
Since the government does not offer subsidy for retirement home projects, HKHS had to pay a sum of HK$100,000,000 for the land premium.
Before the complex was completed, HKHS created its ‘Joyous Living Register’. A LegCo paper in 2012 notes that 900 signed up for membership. “At that time, more than 3,000 indicated interest [in signing up for a Tanner Hill style scheme]. 600 flats were not enough,” Kuk recalls.
Yet the number of applications received at the end last year was unexpectedly low. Kuk believes that the rent is reasonable, and economic recession is to blame for the low occupancy rate.
“The rent is proposed by actuaries and backed by solid facts,” he justifies. “When The Tanner Hill was introduced, the economy is going downhill. Many interested seniors have investments and had to bear with losses in the recession.” He points out that The Tanner Hill received around 380 applications when it was introduced, but only around 70 applicants have proceeded to select their flats.
Kuk acknowledges that the idea of retirement home is relatively new in Hong Kong. Many seniors are still observing and not jumping onto the bandwagon yet.
“They are not in great urgency [to move in],” he explains. “Usually it is when tenants host their friends. The seniors come over and find the place pretty decent, then they decide to apply.”
In light of HKHS’s experience with a retirement home introduced in 2004, Kuk predicts occupancy rate will increase slowly.
“There is a long line to Cheerful Court now, but initially at its introduction, it received little attention. The numbers accumulated slowly,” he says. He is confident that more seniors will be drawn to The Tanner Hill after the clinics, restaurants, and elderly home in the clubhouse begin running.
Real Estate and Construction lawmaker Abraham Shek Lai-him (石禮謙), who listened to HKHS’s proposal regarding The Tanner Hill at LegCo Panel of Housing in March 2012, claims the facility fills a need in the market.
“I visited there earlier and was very impressed. I actually would like to move in there,” he tells Harbour Times, “Hong Kong needs this type of housing. HKHS is playing its role to cater for the needs of different strata of the society and bring harmony.”