Hong Kong fire hastens China's property reset
04/12/2025 04:41
The author is a Reuters Breakingviews columnist. The opinions expressed are his own. By Ka Sing Chan HONG KONG, Dec 4 (Reuters Breakingviews) - From London to New York, catastrophic fires have historically reshaped urban planning. A deadly inferno in an apartment complex in Hong Kong is also prompting a rethink about China’s ageing housing stock. Days after the blaze that killed at least 159 people, China’s State Council ordered nationwide inspections of high-rises to root out fire hazards. On Monday, Premier Li Qiang went further in a study session for his cabinet, urging a "people-centered" urban renewal initiative to build "quality homes" and unlock domestic demand. Hong Kong's fire underscores the challenge of maintenance of high-rise buildings – a problem China will face on a far larger scale. After decades of rapid urbanisation, the People’s Republic has more than one million towers taller than 27 metres, of which nearly 20% are more than 30 years old, per housing ministry data, and this figure is set to rise to 80% by 2040. Residential buildings in China typically are in need of repair after 30 years, which is the threshold for mandatory safety inspection in Hong Kong. This has a cost. Since 1998, homebuyers have made one-off payments into a "housing maintenance fund" that topped 1 trillion yuan ($141.5 billion), state-run news portal Sixth Tone reported last year. Although how much has gone to inspections and repairs over time is unclear, and the fund excludes pre-1998 properties. A nationwide facelift will require much more. Asking homeowners to pay more upfront may only weigh further on the protracted property market slump, but, in the long run, improvement works – such as fitting lifts and installing charging facilities for electric vehicles – can gradually spur new domestic demand that Beijing is looking for to invigorate China's $20 trillion economy. New construction of property used to account for 25% of GDP in the world's second-largest economy. Now, repairing old buildings will partially replace that growth engine. The property management units may eventually eclipse the core businesses of struggling developers such as Country Garden 2007.HK and China Vanke 000002.SZ. This month, Vanke pledged its entire 57% stake in $3 billion Onewo 2602.HK, its property management firm, to its top shareholder – a sign that the business has staying power. China's housing market was entering a new phase. The tragic fire in Hong Kong may accelerate the transition a little bit. CONTEXT NEWS Chinese Premier Li Qiang has urged efforts to implement the urban renewal initiative and steadily advance the construction of "quality homes", Xinhua reported on December 3. He made the comments during a study session of the State Council, it added. On November 28, the State Council issued a circular that requests inspections into all high-rise buildings to identify and remove major fire hazards. The actions follow Hong Kong's deadliest fire in decades. The death toll from the fire which began on November 26 has risen to 159. Police on December 3 revealed that victims included an infant and a 97-year-old as they continued their search for remains. Property servicing is increasingly important to China Vanke https://www.reuters.com/graphics/BRV-BRV/lgpdqjmmevo/chart.png (Editing by Una Galani; Production by Ujjaini Dutta) ((For previous columns by the author, Reuters customers can click on CHAN/ KaSing.Chan@thomsonreuters.com))