The Penny's Bay Community Isolation Facility in Hong Kong on March 1, 2023.
Hong Kong CNN  — 

Behind the gleaming skyscrapers and multimillion-dollar homes that have made this city the world’s most expensive property market lies a far less attractive parallel reality: one of the world’s seemingly most intractable housing crises.

Welcome to Hong Kong, where the average home sells for well north of a million dollars – and even a parking space can go for close to a million – but where more than 200,000 people face waits of at least half a decade for subsidized public housing.

Where far below the billionaire’s row of The Peak and its ultra-exclusive properties that routinely change hands for hundreds of millions of dollars, one in five people live below the poverty line – defined in Hong Kong as 50% of the median monthly household income before welfare – and many call home a cramped subdivided unit or even a cage in a dilapidated tenement block.

The cause of the problem, according to the city’s government, is relatively simple: a chronic lack of supply that is unable to meet the demand of more than 7 million residents crammed into what are already some of the world’s most densely populated neighborhoods.

Housing “tops the agenda,” the city’s chief executive John Lee insisted in his maiden policy address in October, as he pledged to build 30,000 units in the next five years – a promise that follows an order by the central government in Beijing to prioritize the issue.

But critics have long been skeptical of the local government’s reliance on land premiums, sales and taxes, which account for roughly 20% of its annual revenues. Critics say this income stream provides an incentive for it to keep supply tight, limiting what can be done to solve the problem.

CNN asked the Hong Kong government whether its revenue from land sales and premiums affects its housing policy. The Development Bureau replied that, “The government is firmly committed to maintaining a steady and sustained land supply through a multi-pronged approach to meet the housing and socio-economic development needs of the community.”

Units at Penny's Bay Community Isolation Facility sit empty on March 1, 2023.

While that debate rages, the abrupt recent unraveling of the city’s harsh anti-Covid measures has thrown a curveball into the mix that – according to those same critics – offers a litmus test as to the government’s determination to solve the problem.

Many are now calling on the authorities to repurpose the vast Covid quarantine camps the city built during the pandemic to isolate hundreds of thousands of people and which currently lie empty and unused.

As Paul Zimmerman, a councilor in Hong Kong’s southern district and co-founder of the urban-planning advocacy group Designing Hong Kong, put it: “Now the question is: what to do with them?”

Covid hangover and a litmus test

The answer to that question may be less straightforward than it at first seems.

The camps were one of Hong Kong’s more controversial anti-Covid measures – alongside the world’s longest mask mandate and compulsory hotel isolation periods of up to three weeks – and were opposed at the time of their construction not only among those who decried what they saw as draconian quarantine requirements.

The camps also raised the hackles of government critics who said their speedy and expensive construction gave the lie to the narrative that Hong Kong’s housing problem was simply unsolvable.

Hong Kong authorities have not revealed to the public how much the network of quarantine facilities cost. But its total spending bill on the pandemic in the past three years has run to $76 billion (HK$600 billion), according to the city’s financial secretary. CNN has reached out to the Chief Executive’s office, Security Bureau, Health Bureau and Development Bureau about the costs of building and running these quarantine camps.

Public housing plans are usually subject to years of red tape, but in the case of the quarantine camps the government managed to suddenly “find” around 80 hectares of land and build 40,000 pre-fabricated metal units in a matter of months.

Brian Wong, of the local think tank Liber Research Community, is among those who question why the government can’t take a similarly speedy approach and bypass red tape to solve what it has itself acknowledged is an urgent housing crisis.

Wong and others argue the government’s alleged reliance on land revenue is at risk of turning housing into “a structural problem” that cannot be “meaningfully solved.”

“Even if the government wants to make land affordable, they won’t do that because there’s too much at stake,” said Wong, who is critical of what he sees as official indecision and inaction that he says comes at the expense of the city’s poorest people.

He sees the vacant camps as offering a litmus test of the government’s determination to act and has called for the units to be repurposed into social housing, arguing that it would be “very embarrassed if those containers are left vacant or wasted.”

CNN has asked the Hong Kong government what it plans to do with the former quarantine camps. It said it would announce its plans “after a decision is made.”

Small, but still desirable

Only three out of the eight purpose-built quarantine and isolation camps have actually been used; the remaining five were put on stand-by as vaccination rates rose and infection numbers dipped.

The largest and perhaps most infamous of the camps is Penny’s Bay, a site next to Hong Kong’s Disneyland, where more than 270,000 people stayed in nearly 10,000 units during its 958 days of operation that ended on March 1. A second is located next to the Kai Tak Cruise Terminal and a third near a shipping container port. The rest are dotted along the city’s northern outskirts near the border with mainland China.

Measuring around 200 square feet, each unit is roughly the size of a car parking space and contains a simple toilet, shower and bed. Only some have kitchens.

Still, while the units are spartan, many argue they could still offer an attractive temporary solution for those who cannot afford the city’s high rents. In Hong Kong, according to data compiled by property agency Centaline, even “nano-flats” measuring 215 square feet have recently sold for as much as $445,000 – equivalent to more than $2,000 per square foot.