ALL CITIES ARE BEAUTIFUL, BUT THE BEAUTY IS GRIM
— CHRISTOPHER MORLEY
We are on the cusp of a new epoch of urban living.
250 years ago, the arrival of industrial age and new innovations propelled an urban explosion with many flooding into cities in search of better futures. Yet layered under the hopes and dreams of surpluses since the earliest cities are seemingly permanent urban crises of deficits — from unaffordable housing, environmental degradation, to socioeconomic isolation.
As the 2020s begin, we need to go beyond sustainable and smart designs and revisit how urban living may be better enhanced to overcome daily human struggles between surviving and thriving, profit and purpose, societal defaults and future-making. It is the pivotal time to redress these societal urban deficits and make them a thing of the past.
CHALLENGE ACCEPTED: LET’S TAKE A LOOK AT HOUSING IN HONG KONG
Behind the breathtaking nightscape as “Pearl of the Orient”, Hong Kong has long been known for a widening inequality gap exacerbated by the world’s most expensive housing market. Figures showed it takes an average Hong Kong family 21 years[1] to save up for a home. Over-bearing financial burden reduced many to dismal living situations despite the recognition that adequate housing is a fundamental human right[2]. As at 2016, around 210,000 (roughly 3% of Hong Kong’s population)[3] lived in subdivided units with a median size of 5.3 square meters[4]. Encapsulated in substandard housing lies substandard living conditions and a myriad of negative spillover effects including intergenerational poverty, social isolation, and despair.
As our populations continue to grow, we need to rely on more than just government resources to find new models to combat substandard housing and substandard living. In this provocation, while we may not have (nor should we seek to find) all the answers, we hope to spark new perspectives, define pockets of innovation opportunities, and most importantly, restore hope in this seemingly unsolvable conundrum of what is our existing urban housing system.
RETHINKING AFFORDABLE HOUSING VIA A MOTIVATIONS-LED APPROACH
Two narrative frames to address the affordable housing challenge can be inferred from observations in Hong Kong:
(1) Resources-led approach focuses on further increasing (i) infrastructure investments, in the form of additional land and housing supply, and / or (ii) government subsidies and income support, to increase the availability of affordable housing units and thereby improve overall standard of living.
This narrative looks at the housing challenge from a macro perspective and assumes the lens of an economist or an urban planner with the objective of alleviating the supply shortage.
(2) Motivations-led approach looks at the affordable housing challenge as an aggregation of individuals’ daily struggles, recognizing that restoring motivations and opening up new possibilities can shape demand on a more human and sustainable level. For example, it is observed that many deliberately chose to forgo comfort outside city centres for affordable convenience in urban subdivided units, in order to live within easy distance to their workplace. Some others accepted substandard housing as a “necessary evil” or interim solution, as they await public housing allocation, look to save more for the future, or perhaps as they weather personal or financial crises.
This narrative focuses on exploring means to resolve the economic supply-and-demand problem by addressing the strong social and cultural drivers of affordable housing as a challenge in Hong Kong.
While both frames are not mutually exclusive, it is increasingly possible to see that a resources-led approach is insufficient in addressing the enormity of the cumulative shortfall and challenges ahead, at least in the short term. It becomes as important to explore new systems and possibilities to really make the most of our existing assets, as it is to develop new assets.
This is where a motivations-led approach, on the other hand, may help fill the gap.
INNOVATING TOWARDS NEW URBAN LIVING OPPORTUNITIES
The “New Urban” purpose-driven development blueprint looks at the next wave of innovative solutions to inequality by tackling the underlying culprits in a human-centric approach. We aim to find answers in wholly new ways, with the broadest visions to test and finetune a suite of possible solutions to empower those adversely affected towards better futures.
In the context of affordable housing, adopting a motivations-led approach requires us to acknowledge that housing problems may have non-housing solutions. A ladder of “New Urban” living aspirations is recommended in order to facilitate the creation of new hypotheses, prototypes, and experimentation of different models to reverse the motivational drivers that made unaffordable housing a reality.
Observations from Hong Kong inspire three new hypotheses as key opportunities that can pave the way to a more equitable and sustainable urban housing system:
1. Innovative value capture mechanism
Hong Kong’s property boom over the past few decades disproportionally benefit property owners who made millions through capital gains whilst tenants suffer skyrocketing rental values and increasingly challenging living conditions due to financial constraints.
Can we invent new financing and investment models, taking reference to housing cooperatives, to redistribute access to value capture from rising property value and restore adequate housing as an affordable right beyond the hands of capital holders and property owners? (See Possibility #1)
2. Elevated synergistic value from existing resources
Imagine living in a nano flat equivalent to the size of a standard parking space. While this may be substandard for a home, it may be relatively more tolerable for just a bedroom, to be complemented by other communal components including shared living areas and community networks. In fact, innovative forms of shared housing may hold the key to optmising the use of space in existing residential properties with the promise of new social network that can help combat urban social isolations.
Can we build on this and navigate new community platforms to create more non-financial value, may it be social, psychological or functional, from the use of existing permanent housing units? (See Possibility #2)
3. Reset defaults to reverse vision deficits
The combination of an over-reliance on public housing and / or government subsidies and an over-heated private property market, collectively fuelled the lack of innovation by private property developers as well as a loss of hope amongst tenants or aspiring property buyers. When working with grassroot families in Hong Kong, it can be observed that many were mentally stuck in a poverty trap without a concept of how a “better future” could play out for them as they become desensitized to their own circumstances.
Can we provide new social ladders and empowerment solutions to help those living in substandard housing anchor towards new visions for a better place to call home?
POSSIBILITY #1: IMPACT REAL ESTATE
In the world of commercial real estate, a REIT (real estate investment trust) company can pool in multiple investors to own and operate real estate to generate income. The income is then distributed to investors as dividends and a return on their financial investments.
Applying this concept in the context of affordable housing, impact investors (private and / or institutional), investing with the intent to generate positive social return alongside financial return, can pool funds into a portfolio of residential properties. Operated by an “impact realty”, these properties can be rented out as affordable housing units. The tenants will pay rent, set at an affordable rate, to the “impact realty”. A small proportion of the rent can be channeled to the trust fund as a “co-investment” on the part of the tenant into the overall fund. The tenants, as “co-investors”, will therefore be entitled to a relevant share of the dividends from REIT and reap the financial benefits of property price increases in a bull market.
This model offers a market-based solution worthy of further exploration and consideration. It aspires to offer affordable and stable accommodation to those in need, potentially further supported by community empowerment solutions and networks, whilst protecting value in the housing market. It also offers a savings / co-investment platform to provide an additional source of income, and more fundamentally, redistributes access to value capture between landlords (impact investors) and tenants.
POSSIBILITY #2: CO-LIVING INNOVATIONS
Co-living as a modern, affordable, and to a certain extent, trendy model of shared housing has gained traction as an attractive option to millennials around the world.
Inspired by experiences speaking to Binzip (housing cooperative), Seoul Youth Hub (co-working and youth development space), Root Impact (changemakers’ co-living, co-working and learning hub), and C. (social investment platform) in Seoul, Korea, the next-generation of co-living innovation may include:
· savings pool amongst tenants living in co-living blocks for better interest returns (similar to a cooperative / mutual society setup)
· live-in / residency-based apprenticeship schemes to build exposure, experience and help youth develop their identities through a stronger support network
· added focus on “ground-building” process encouraging and rewarding tenant / resident contribution, potentially through an alternative / community currency system (e.g. Time Bank model) where tenants can redeem daily household items by taking up additional household chores
THE VOYAGE TO NEW URBAN CONTINUES
The prospect of providing affordable housing for all may seem unlikely at this point — but for a moment, imagine a new reality where a multi-dimensional system of new opportunities exists. Imagine a new reality where the private housing market is diverse and vibrant, as much in the availability of realistic options as it has been in the number of transactions over the past decade. Imagine a new reality where substandard housing, like squatter areas common in mid-20th Century Hong Kong, becomes a problem of the past.
Whilst recognizing that there are no magic bullets for solving the affordable housing challenge in all its complexity, a journey of exploration along a motivations-led approach can stand a chance at bringing us closer to this imagined “New Urban” affordable housing reality. Three key opportunities and two possibilities explored in this provocation presented a potential shift in our philosophies, means, and practices to drive substandard housing and living to irrelevance.
As the challenge of affordable housing is global, these innovations and learnings from future experiments shall be relevant not just for Hong Kong, but also for any urban cities in Asia facing a similarly dysfunctional housing market. Together, perhaps, we may open up diversified pathways towards a new wave of affordable housing possibilities and a future of “New Urban” living — in Hong Kong and beyond.
WORKS CITED:
[1] Demographia. “15th Annual Demographia International Housing Affordability Survey: 2019,” Demographia, January 2019. http://www.demographia.com/dhi.pdf
[2] United Nations. “Universal Declaration of Human Rights”, United Nations, December 1948. https://www.un.org/en/universal-declaration-human-rights/
[3] Census and Statistics Department. “2016 Population By-census Thematic Report: Persons Living in Subdivided Units”, Government of the Hong Kong Special Administrative Region, January 2018. https://www.bycensus2016.gov.hk/data/16BC_SDU_report.pdf
[4] Research Office, Legislative Council Secretariat. “Subdivided units in Hong Kong,” Legislative Council of the Hong Kong Special Administrative Region, June 2018. www.legco.gov.hk/research-publications/
