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According to the news from The Economist, entitled “Economic Convergence: Economic Headwinds Return”, “Ten years ago, developing economies were catching up with developed ones remarkably quickly. It was an aberration.”

Reviewing the decade-and-a-half journey of China from a lagging economy to one that has surpassed many nations in Europe in terms of average income generation, the article describes the dire realities that beset the once sleeping-giant-turned-global-power. Using Hong Kong as the standard by which to measure economic growth, average incomes dip to 50% in Shenzhen, to 25% in Guandong and to a mere 10% in Yunnan. That is an overall average of less than 30% that of Hong Kong, which is essentially a small dot of an island compared to the gigantic mainland China teeming with so many millions of people.

The average annual rate of growth from 2000 to 2009 for developing nations was 7.6%, 4.5% higher than that seen in developed rich nations. That unprecedented rate practically narrowed down the gap between the developed and developing countries.

The once deprived populations of the world, a big majority of whom are found in Asia and living on less than the global poverty level of $1.25 daily income, surged on from a share of 30% of the world population in 2000 to less than 10% as of April 2014, according to the Center for Global Development based on new date from the World Bank. At that pace, it is estimated that in only 30 years, the average income per person would converge with that in America. This is certainly cause for great hope for many people on a global scale.

Sad to say, those hopes are now slipping away. An evaluation of data on GDP per person based on new computations of cost of living released in April by the World Bank’s International Comparison Programme (ICP) seems to show that convergence has slowed down drastically.

Since 2008, growth rates across the emerging nations have slowed down and matched those in developed economies. When the new ICP figures are applied, the average GDP per capita in the emerging world, measured on a purchasing-power-parity (PPP) basis, grew just 2.6 percentage points faster than American GDP in 2013. If China is removed from the estimates, the difference is only 1.1%. At that rate, convergence with rich-economy incomes will occur in a hundred years or more, longer than a generation. If China is included, emerging economies could expect to reach rich-world income levels, on average, in a little over half-a-century.

Japan, which achieved industrialization in the first part of the 20th century, grew to be the world’s second largest economy, next to USA. South Korea, Taiwan and several city-states like Singapore and Hong Kong also grew and developed into prosperous nations. The rush to achieve levels of growth close to those of developing nations became an addiction to these nations and others who needed to catch up as well. The price paid in terms of investments on human capital led to social and political problems as some nations had to export their workers to the industrialized or more prosperous nations. Ironically, the income generated by those workers help to sustain those nations during the crises that transpired.

In trying to explain the growth disparity, economists pointed to institutions being the key while others focused on “geography and climate”. Moreover, they said that “remoteness from economic centers and hot, disease-prone conditions could retard development,” which is the case in many of the Southeast Asian countries where the issues of rebellion and ethnic differences provide obstacles to development of the depressed country-sides.

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Hong Kong investors are turning run-down factories and warehouses into offices to fill a space shortage in the city with the world's second-highest rents.

Pamfleet Group and Gaw Capital Partners are among real estate funds that bought more than HK$54 billion of the city's industrial properties in the year ended June 30, according to data compiled by Centaline Property Agency. That is the highest for any 12-month period on record, the company's data shows.

Redevelopment of vacant industrial spaces has accelerated since 2009 as investors lured by surging office rents seek to exploit the gap between the cost of acquiring the buildings and the potential return from converting them for use by banks, insurers and other business tenants.

The government has implemented policy changes since the 1980s to encourage the transformation of unused properties after manufacturing shifted to cheaper locations in the mainland and Southeast Asia.

"It's been a slow start, but things have picked up over the past few years," said Simon Lo, Hong Kong-based head of Asia research at property broker Colliers International. "Buyers are coming in with the expectation their returns will go up multiple times because of the redevelopment potential."

Demand for offices has been swelling as Hong Kong cemented its place as a regional financial hub over the past decade. Average prime office rents have risen 54 per cent to June from mid-2009, according to government figures. Average vacancy rates fell to 6.1 per cent at the end of 2012 from 11.5 per cent in 2009.

The makeovers of industrial properties will provide about 800,000 square feet of new office space in Hong Kong next year, according to Colliers. Excluding conversions, developers will add about 456,000 sq ft of new space, the broker said.

Increasing investor demand has pushed up prices of warehouses and factories almost threefold since early 2009, according to broker CBRE Group. At the end of the second quarter, warehouses fetched about HK$2,680 per square foot while factories were getting HK$3,540 per square foot. Higher prices drove down the average investment yield to below 3 per cent at the end of June, Colliers said.

By contrast, prices of prime offices in Central have doubled to more than HK$35,000 per square foot in the first half, according to government figures. Yields have fallen to about 2.8 per cent, according to Colliers.

Goodman Group, whose funds own about 40 per cent of Hong Kong's prime warehouse space, is taking advantage of rising values to exit some properties. In the past year it has sold some of its older and smaller assets to buyers that plan to convert them for office use, said Philip Pearce, Greater China managing director of the Sydney-based company.

"What we have been able to do is redeploy that money to other acquisitions and upgrade existing properties," Pearce said. "And when you've taken supply out of the market, it clearly has an impact" on rents, he said.

Pamfleet and Swiss private-equity fund Partners Group in April completed a HK$958 million acquisition of a 13-year-old factory building in Kowloon East, which has been designated by the government as a secondary business district.

The building is within walking distance from the 21-storey, 1.1 million square foot Manulife Financial Centre developed by Sun Hung Kai Properties, Hong Kong's biggest builder by market value, and Henderson Land Development on an old industrial site in 2007.

Pamfleet will convert the project into an office tower that can be opened to tenants as early as the end of this year, chief executive Andrew Moore said.

New office supply in Hong Kong will fall about a third short of demand by 2020, according to CBRE. To tackle the shortage, the government has pledged to develop Kowloon East, which includes the old Kai Tak airport site, into a secondary financial district with more than 40 million square feet of prime office space.

Almost 90 per cent of the 1,500 industrial buildings in Hong Kong are eligible for conversion under the government's plan, according to Colliers.