Sunday, November 30, 2008

Market Rates

Reports by Hong Kong's Director of Audit usually offer an entertaining insight into governmental incompetence, and the latest is no exception. It appears that almost a quarter of stalls in public markets are unlet, and many markets are losing money. At the same time, many stall rents have not been raised for a number of years.

The report offers a number of accounts of mismanagement which clearly need to be rectified, but its two main conclusions appear to be rather contradictory: that more should be done to let vacant stalls, and that too many stalls are underpriced. Surely the fact that so many stalls are vacant suggests that the rental asked for them is too high? Basic economics tells us that lowering the rent will increase the take-up of stalls; raising it will drive away more business.

There is no doubt that shopping patterns are changing, with supermarkets taking away a big chunk of the fresh food business, but it would be a shame to see Hong Kong's wet markets disappear - they are part of the local culture, and generally offer a larger selection of fresh foods, particularly seafood, than the supermarkets. Perhaps the current recession will drive customers back to the markets, which are generally somewhat cheaper.

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