Hong Kong's Back

Anyone making a last minute decision to visit Hong Kong last weekend would have met an unfamiliar response from the airlines: "sorry, no seats for the day you want."

And hotels were in a similar position: "full house," was the standard reply.

It's been a long time since Hong Kong was like this. Always bustling, it's been through a period of, by its own amazing standards, a pretty dull time.

Even three months ago, despite signs of improvement, the city was not back to its former glory. What a difference a few weeks makes!

Last year, more than 900 new restaurants were granted licences to open in Hong Kong. Now, if they have survived the struggle of the past year, they may be doing good business for that most reliable barometer of the wealth of a community, the spending of disposable income in entertainment outlets, was off the scale this past weekend.

Just two years ago, bars were debating whether to bother staying open after happy hour. Now, many bars do not even fill up until after Happy Hour: even the extraordinarily high prices charged (significantly more than, say, London) don't force people to drink in the early evening.

Wanchai and Lan Kwai Fong are thronged every night - and it's not just tourists; there are many locals present, too.

Of course, not every bar is full all of the time, and there is a pub / bar / club differential displayed in the times the bars are populated.

Salaries have climbed: a messenger now earns approximately HKD5,000 per month. Given the cost of living in Hong Kong, that's poor - but it's comparable to a middle management salary in, say, Kuala Lumpur.

The construction of flats has declined this year - but the government says that this will not be sufficient to cause any housing shortage. Given that prices have risen 40% in the past year, any shortage would create a crisis.

The city's getting too busy for some. A former policeman who has lived in HK for almsot 30 years is leaving. He's moving to Singapore. "I'm fed up with living in a cupboard, there's nowhere for the kids to play, the education's not what it used to be and there's increasing polution."

A bank officer who has been in HK for five years, often thought of as the shortest time it takes to get to know the place agrees: "it's dirty, smelly, everywhere is so noisy." He should have been there fifteen years ago: then the sound of piledrivers permeated Wanchai, Central and TST, day and night, seven days a week. Now, sitting in the terrace of a restaurant in Knutsford Terrace, TST, the only audible sound is the omnipresent hum of air-conditioning units.

The pollution is coming from China. The weather reports say it's cloudy; the nostrils say differently. And it's beginning to look like Tokyo a decade ago with people walking around in face masks.

The bars and restaurants that struggled for some time are now, at least sometimes, making good profits. They had a dilemma: they were locked into high rents when the bad times came. They could not reduce prices because they needed margin and they could not increase prices because they were already too high for locals. Now, volumes have increased but prices have remained high. A pint of Guinness, for example, will cost HKD60. It's only because the HKD is tied to the weak USD that that price is GBP4.40. When the USD / GBP balance goes back to a more usual value making the HKD about 11 to the pound, that beer will cost GBP5.45 - that's twice the price that it costs in London. And other beers are similarly priced.

The restaurant in Knutsford Terrace, BJ's Bistro sells "Parisienne cuisine" with a set lunch at HKD88 including soft shell crabs and sea bass. There are cheaper options, for as little as HKD68. That's a five course lunch including coffee, demonstrating the competition amongst food outlets. But don't order coffee there unless you want apoplexy: a single cup was HKD40. With Red Bull costing as much as HKD35 in bars, BJ's coffee is, to be as nice as possible, a bloody rip-off. And that price doesn't include the automatic 10% service charge.

The local coffee shops and restaurants are doing much brisker business; and the bakeries are selling gai mai bau and dan tat (coconut fingers and egg tarts) as fast as they can produce them: locals are not being lavish - although Hong Kong's love affair with lunch remains at a constant high.

Like shopping centres in Singapore and Kuala Lumpur, Hong Kong is packed with peoplel unlike in the other two, they are laden with carrier bags, often bearing the names of major brands - often the result of highly effective negotiating by purchasers, and shops willing to discount to make a sale. One watch shop recently discounted a new Longines model by almost 50% to make a sale during a late afternoon heavy rainstorm.

Noticeable, too, is the fact that customers are spending cash - in restaurants and bars where two years ago almost all sales, such as there were, were on plastic now people are spending real money. "We are seeing a lot of cash," one bar owner said." It's good - it adds to our margin," he added.

Hotels are building their rates - up as much as 50% against two years ago and up 15% so far this year. Bookings are already full for the busy pre-Christmas period. One Hong Kong resident has tried to find a serviced apartment for the whole of November and December and found it difficult to get anywhere with the whole two months availability, and what he has found is USD2,000 per month for 400 square feet. "We'll have to eat out every night because there's no room to swing a chopper," he laughed, as his wife looked around the bar beneath the flat, realising that there was every chance that it was about to become her living room for two months.

There's a lot of foreign money coming into Hong Kong - much of the property boom has been fuelled by Chinese money, driving even long term expats to question the wisdom of the market and whether they should sell up and move on. Some are.

Hong Kong is proving that it can live without them - but for them there is one important question: can they live without Hong Kong?

The former policeman moving to Singapore is hedging his bets. "There's a lot that's good about Singapore and it's better for my family." But I'm keeping a bolt-hole in Hong Kong and a finger in a couple of business interests. "I know it's going to be very hard to leave."