Asia's Housing-Led Economy

THOUGH the thousands of lumbering concrete apartment blocks here are numbingly uniform, a half million of their pint-sized apartments are some of the most sought-after accommodations in the world. They are clean, safe, and cheap. And they are all government owned.

``We're a model of free enterprise, but we're the biggest landlord in the Western world,'' says government spokesman Bernard Long.

Forced into the home-building business when a squatter fire on Dec. 24, 1953, left 50,000 people homeless, the government has never looked back.

An extraordinary 2.9 million people - half of the colony's population - live in apartments built, owned, and rented by the government. Compared with private-sector flats, where rents routinely gobble 40 to 50 percent of family income, public housing tenants pay a maximum 15 percent. There is a 4-to-10-year waiting list of more than 100,000 families.

Since 1953, housing policy rapidly matured from an exercise in crisis accommodation - housing the homeless already here and the thousands of refugees streaming in from China - to a major role in the colony's economic growth.

``Development in Hong Kong has been housing led,'' says Sir David Akers-Jones, the Hong Kong Housing Authority chairman.

From the six gleaming New Towns and their clusters of shiny 36-story tower blocks, known quaintly as housing ``estates,'' to the monumental private buildings where a two-bedroom apartment rents for US$5,000 a month and up, housing has had an indelible impact on the Hong Kong skyline.

Land is perhaps the most valuable of commodities here, and it is all owned by the government. ``Crown'' land, as it is known, cannot be sold outright. Instead, private developers buy long-term leases from the government, which can sharply influence prices by controlling how much land is sold. High land prices force developers to build tall tower blocks holding 2,000 to 3,000 people each and ``patch the blocks together'' to recover their costs, explains Victor Sit, a professor at the University of Hong Kong.

Avoiding the burden of land expenses, which can account for 30 to 50 percent of a private building's cost, the government keeps rent well below the market price.

``Those whose income level is just above the limit for public housing are able to cope,'' said legislative councilor Leung Wai-tung, ``by renting a cubicle.''

By charging market rates for the commercial shops, the housing authority actually makes a profit on day-to-day operations, and last year was able to cover 59 percent of its US$48 million in new construction costs, with government loans paying for the rest.

The government's low-rent policy played a key role in Hong Kong's postwar emergence as a major manufacturing center and financial power.

That strategy, in part, helped account for the colony's spectacular growth, with gross domestic product skyrocketing from $2.5 billion in 1967 to $14.5 billion in 1980, and an estimated $54.5 billion in 1988.

Despite Hong Kong's vigorous housing program, more than 3,000 people still live aboard tiny fishing boats, and 360,000 people remain in ramshackle squatter camps patched together from corrugated tin and cheap plywood.

The camps now have electricity and running water, but fire is a perpetual hazard.

The government's long-range housing policy published two years ago outlines housing strategy until 2001, four years after Hong Kong reverts to Chinese sovereignty in 1997.

``Unless there are unforeseen waves of Chinese, everyone should be decently housed by the end of the century in small but comfortable flats,'' said Sir David.

``Small'' by Hong Kong proportions, however, would seem positively cramped by United States standards.

Though its 420 square miles is slightly smaller than Los Angeles, three-quarters of Hong Kong's 5.7 million people are crammed into 10 percent of its land along a narrow band that circles the harbor, both on the mainland side of the territory known as Kowloon and across the harbor on Hong Kong island. In newly built government housing four to five people live in 350 square feet of space.