Open House: Cheapest Hong Kong luxury housing comes with a major catch

One of Hong Kong’s most enduringly strange places is Sea Ranch, a failed resort built in the 1970s for the wealthy that today offers some of the city’s cheapest real estate.

For example, one can buy a 1,250-square-foot (116-square-meter) apartment overlooking the sea for HK$5.3 million ($677,500), or less than half of what a home of a similar size would fetch in the nearby expat enclave of Discovery Bay.

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The catch? It’s located in a remote part of Lantau Island, with no direct transport links to Hong Kong Island, shops or medical facilities, and a reputation for being a ghost town fringed by jungle.

The development’s existence illustrates the extreme range of of properties within a roughly hour-long commuting distance from the city center that Hong Kong offers, from densely packed apartment blocks and upmarket townhouses, to car-free islands and sprawling coastal villages. Even then, Sea Ranch occupies a unique niche. It’s nearly impossible to find comparable prices, let alone in luxury developments — failed or otherwise. As the government seeks to revive the city’s residential market, which has endured a three-year slump, Sea Ranch owners are hoping the distressed pricing will lure greater interest in the once-thriving community.

Sea Ranch was first marketed in 1975

It was supposed to be very different. When Sea Ranch was first marketed in 1975, the beachside development was billed as the ultimate getaway for executives and their families seeking respite from the clamor of the city. Built by Hutchison Whampoa Ltd., a historic British trading firm soon after acquired by Li Ka-shing, the project was initially successful. All 200 units were sold before construction, which was completed in 1979.

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No road links to this day

At a time when international travel was difficult and costly, and clubhouse facilities in residential developments were non-existent, Sea Ranch offered a rare oasis. It boasted Hong Kong’s largest private swimming pool, a sprawling clubhouse with restaurants and a bar, tennis courts, helipad, its own beach, and a regular high-speed boat service to Hong Kong Island. Due to its isolation — there are no road links to this day — the development guaranteed exclusivity in an overcrowded colony.

Freya Giles lived in Sea Ranch for four years as a young child just after it opened. She recalled how children were allowed to run wild, hunting for snakes and jumping off rocks, provided they were home for sunset. Dinner in the clubhouse was served under a glittering disco ball.

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“Some, like us, lived there full-time but many used it as a weekend home,” said Giles, who runs her own business in Hong Kong. “I suppose the adults were having fun too because there was a seemingly endless stream of parties.”

Despite its early popularity among expats, the project soon ran into difficulties. Hutchison had underestimated the cost of running the project and debts ballooned. At the same time, Hong Kong was going through one of its periodic crises of confidence, as talks between the UK and China over the British colony’s future triggered capital outflows and a crash in the then-free floating currency. Hutchison was also under new management following Li’s takeover. In 1984, the firm quit the development, selling the holding company that managed the facilities to some residents for a nominal sum.

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It proved to be a pivotal moment for Sea Ranch. In the following years, wrangling between groups of owners over control led to court cases and cost cutting. The clubhouse, the tennis courts and swimming pool were closed and abandoned to the encroaching jungle. The direct ferry service was cut. Many properties lay empty. The development acquired a reputation as a fallen paradise inhabited by loners and artists, and one of the city’s cheapest neighborhoods.

Sea Ranch’s failure is in contrast to Discovery Bay

Sea Ranch’s failure is in contrast to Discovery Bay, another ambitious development on an isolated part of Lantau begun around the same time.

Originally conceived as a hotel resort complex, Discovery Bay had the advantage of its much larger size of 650 hectares and the backing of the influential Cha family. The upscale development, which is still managed by a single company, now has a population of about 20,000 and facilities including shopping malls, a 27-hole golf course, a number of schools and swish ferry service to the financial district. Instead of cars, residents get around by golf cart — if they can afford them — or bus. Residential prices are typically lower than on Hong Kong Island.

Today, one-time rival Sea Ranch remains a challenging if quiet place to live. The only transport is by a 20-minute ferry ride to the neighboring island of Cheung Chau, which is also the nearest place to buy groceries. From there it’s at least another half hour by another ferry to Hong Kong Island.

Yet for some residents, such as Andrew De Caro, it’s that tranquility — and affordability — that makes Sea Ranch life appealing.

“It’s not for everybody,” said De Caro, a private jet pilot who has lived at Sea Ranch for about 12 years. “But I wouldn’t live anywhere else. It’s just so peaceful here.”

The American bought his current 1,250-square-foot apartment that overlooks the sea for HK$1.2 million in 2009. He spent a similar amount and two years renovating it — no easy task given the lack of transport.

He ended up buying the adjacent three-bedroom flat as well, which he has put on the market for HK$5.3 million, or HK$4,240 per square foot. That compares with an average HK$9,886 per square foot for Discovery Bay and HK$18,704 per square foot for Hong Kong’s Mid-Levels district, based on recent sales transactions.

De Caro also purchased a 640-square-foot property nearby, which he transformed into a high-spec home with a gas fireplace, sauna, free-standing bath and stepladder leading to a mezzanine bedroom. That apartment, which he refers to as his “tree house,” is on sale for HK$3.3 million.

“I’ve got friends who live in nice neighborhoods,” said De Caro. “Beautiful neighborhoods, super convenient. But they have 380 square feet for HK$8 million.”

Hong Kong’s property market has faced a challenging environment in the past three years, with surging borrowing costs and China’s economic slowdown hurting demand and driving prices lower. To bolster activity, the government scrapped longstanding home-purchase curbs last week. As a result foreign buyers will no longer be subject to a 15% tax, while a 7.5% tax on buying second homes was also dropped. The trickle-down effect may stir up demand in downmarket areas such as Sea Ranch.

Around 130 people live at Sea Ranch now

De Caro estimates there are more than 130 people living at Sea Ranch now, compared with less than 50 when he moved there, as the development’s low prices drew renewed interest amid the earlier property boom. His neighbors include a retired university professor, an ex-police officer and the family of a private investor, he said. A number of units are occupied by workers building a HK$31 billion incinerator plant on a nearby island.

The development remains in good condition more than 40 years after construction. Some apartments appear well looked after, with neat gardens decorated with ornaments and plants. Others have an air of neglect and patios overgrown with weeds. The building structures themselves are solid and show little sign of disrepair, even in Hong Kong’s often unforgiving climate.

Management fees range from HK$1,800 to HK$3,200 a month, which pay for basic maintenance and security, as well as the ferry service. Garbage is collected twice a week. While the beach is public, the estate itself is private. Apart from by boat (hiring a sampan taxi is a possible alternative to the ferry), the only way to access the peninsula site is by hiking for hours over rough terrain.

In a city which is constantly undergoing change, Sea Ranch changes little. The biggest alteration in recent years was a new pier after a typhoon destroyed the original in 2017. The community’s abiding quality is quietude, and that is just how De Caro likes it.

“This is my Hong Kong,” said De Caro, sipping tea on a white couch in his apartment overlooking the sea. “Everybody has their own piece of Hong Kong. This just happens to be mine.”