No matter what happened to real-estate prices in this superstitious Chinese city, the one surefire way to get a cheap apartment was to move in with a ghost. Websites track "haunted houses" or hongza, as they are known in Cantonese, which typically sell or rent for discounted prices.
But the latest boom in real-estate prices has nearly wiped away Hong Kong's haunted-house discount.
That has been bad news for Ng Goon Lau, 62 years old, who made a career—and a tidy fortune—braving the supernatural. For more than 10 years, he says he has bought and sold apartments where a tenant died an unnatural death, paying a third less than the market price and later selling at a healthy profit. Meantime, he says, he rents to expatriates, who tend to be less superstitious than locals.
Mr. Ng's business model is under fire by more than a dozen aggressive new competitors, says Vienna Lee of Squarefoot.com.hk, which runs a popular local search engine for these apartments.
That isn't surprising. After doubling in the past four years, Hong Kong property prices are now among the highest in the world.
Rising demand has squeezed the haunted house discount to as low as 5%, says Mr. Ng. "The market is crazy now," he says, complaining that he was able to purchase only one hongza in 2012. Even neighborhoods traditionally shunned for their proximity to funeral homes or cemeteries have seen their prices spike.
Hong Kong is a superstitious place where people regularly put out offerings of food and other gifts for dead relatives. For an entire month in the summer, the city observes the Hungry Ghost Festival, where spirits are believed to visit the city and need to be fed and entertained.
In 2001, the city's main English daily, the South China Morning Post, hired monks to cleanse the newsroom after staffers reported seeing ghosts in the bathroom. After the ritual, there were no more complaints, said Niall Fraser, deputy news editor, who was there at the time. "Everyone seemed quite happy. It seemed to do the trick."
Among expatriates willing to shack up with ghosts for a good deal, demand is rising. Rents have jumped nearly 60% across the city in the past four years, according to government figures.
Now, Mr. Ng says, he is able to rent out some at nearly market rent. "All my tenants are very happy," he says. "No one has complained that they've seen ghosts."
Aaron Bleasdale, a lawyer, once rented a two-floor penthouse in Mid-Levels, one of Hong Kong's greenest and most-coveted neighborhoods, whose tenant had recently died. At just 13,000 Hong Kong dollars, or about $1,700, it was a discount of at least 40%, he says. With the rent split between him and a roommate, the apartment was a bargain.
"It was a great location, with a rooftop garden. I'd live with a ghost for that price," said Mr. Bleasdale, who moved out of the apartment a few years ago, but still lives in Hong Kong.
"The [ghosts] here probably wouldn't speak English anyway, so I don't think they would bother me," he said. "Anyway I'm more of the Casper the Friendly Ghost school."
The first haunted house Mr. Ng sold was actually his own. When he was renovating his apartment in preparation for a sale in 1993, a worker was electrocuted.
Shaken but determined to go through with the sale, he says he got a higher price than he expected, despite the death.
Since then, Mr. Ng says he has bought and sold 20 haunted apartments. He regularly scans newspapers to find accounts of deaths and aggressively bids for discounts. He says he is proud of how he has helped pioneer Hong Kong's trade in haunted houses. "I learned it by myself," he says. "Nobody taught me. It's not my fate or luckiness, but my boldness."
His apartments have had unnatural deaths in them, which is what earns them the "haunted" moniker in Hong Kong.
Many banks have online calculators that put values on thousands of apartments in Hong Kong. The Bank of China (Hong Kong) Ltd.'s 2388.HK +0.58%calculator delivers an error message for every unit located on the floor of an apartment building where in the 1980s a woman killed her husband. The same is true for other apartments located near notorious murder sites.
The bank said the firm it uses to value properties didn't provide a price for the apartment where the murder occurred. It didn't comment on why the calculator delivers the same error message for other units on the floor. It said it provides mortgage services for hongza apartments on a "case-by-case" basis.
Standard Chartered Bank (Hong Kong) Ltd. said it doesn't provide mortgages for "haunted" apartments.
Two years ago, Mr. Ng, who says he doesn't believe in ghosts, began winding down his shark-fin business, which was hurt by environmentalist-led boycotts, even as prices on haunted houses soared. "They're still more profitable than shark's fins," he said.
He isn't worried about his new competitors, saying their high-price deals will backfire and he will still be there. "They're amateurs," he said.
Source: Wall Street Journal