Hong Kong bubbling over with taxis
House prices in Hong Kong have more than doubled since the start of 2009 because of near-record low mortgage interest rates and mainland Chinese buyers snapping up apartments, transforming the city into the world’s most expensive place to buy a home.
Investors keen to find alternative investment vehicles are going for the four-wheeled variety, and the cost of taxi plates has surged by more than 80 per cent since taking off in September 2009, Bloomberg reports.
The territory’s main stock market, the Hang Seng, is down almost 7 per cent this year, and government measures to curb speculation in the property market mean prices are starting to cool.
The price of a taxi plate and taxi reached a record HK$7.66 million (€740,000) on June 6th, which is the highest since the brokerage Taxixchange.com started tracking the data in 2000. Ten taxis sold on August 5th for HK$7.1 million (€680,000) each.
Buy to rent
Investors buy the licences, and then hand them over to taxi-management companies, which rent them to drivers to generate income. The broker Sintat Motors Management reckons that about half the licences are bought by investors.
Hong Kong taxis are usually Toyota Crowns and they are cheap – flag fall is HK$20 (€1.93) for the first two kilometres on Hong Kong island and Kowloon for the “urban” taxis where the cars are red, with slightly cheaper fares in the New Territories and Lantau, where the taxis are green and blue respectively. All of the cars have white or grey roofs.
Because Hong Kong is small, fares are usually very reasonable and the drivers seem to make their money by the volume of business.
And there is the added bonus that supply of taxis is limited, just as it was in Ireland back in the day.
The last time the territory’s transport department issued new taxi licences was 1994. There are 15,250 red, or “urban” taxis in Hong Kong and Kowloon.
However, Billy Mak, associate professor of finance at Hong Kong Baptist University, says the signs of a bubble are all there, because the cost of the licences is rising at a faster rate than the income the taxis generate. The daily cost for renting a taxi, which runs between HK$680 (€65.50) to HK$800 (€77) has risen by 11 per cent.