Towering arrogance and greed
Secretary for Housing, Planning and Lands Michael Suen Ming-yeung sold the Hunghom Peninsula project to developers for $866 million - far below the market price. Blinded by profit, New World Development and Sun Hung Kai Properties have decided to demolish the seven residential towers, despite strong public opposition.
Capitalists in a capitalist society like Hong Kong are expected to make money. Their private properties are protected by law. As long as they act within the legal confines, they are entitled to do whatever they like, even if it goes against public opinion and Mother Nature. Yet, the developers' conduct smacks of arrogance, and they have become a public enemy.
On the basis of $4,000 to $4,500 per square foot for an average apartment in an urban area, the developers could easily earn a $1 billion windfall without tearing down the buildings. Yet, they are so greedy that they insist on making the most from the site. Their luxury flats are expected to fetch between $7,000 and $7,500 per square foot. That adds up to earnings of $6.3 billion.
Instead of keeping a low profile while taking the lion's share, the developers insisted it would send the wrong message to the younger generation if they did not maximise use of the precious land resources. They also boast that they will adhere to the latest standards in demolishing the structures so as to help raise environmental awareness.
The way they have sought to turn black into white is, to put it mildly, offensive and unethical. In order to justify the unjustifiable, one executive director of New World, Stewart Leung Chi-kin, denounced the existing flats as substandard. 'A pregnant woman can hardly use the bathroom,' he said. 'As small as I am, I find it difficult to enter. I had to stand between the toilet and the wash basin to close the door.' Sun Hung Kai vice-chairman Kwok Bing-kwong, on the other hand, called the HOS flats a 'malicious tumour'.
What they had conveniently forgotten was that the 'tumour' was, in fact, built by New World. Mr Leung owes the public an explanation as to why the company came up with such a poor standard of flats for public consumption.
In the latest economic theories, private property has to be seen in the bigger context of an 'external economy'. The demolition of the flats is bound to give rise to an 'external diseconomy', where one party benefits without having to pay the relative costs. The adverse effects on the well-being of citizens in Hong Kong will include air, noise and other pollution. Waste disposal, traffic congestion and other negative effects will lead to social costs in the form of increased medical bills and public inconvenience. The polluters should be held responsible for all these hidden social costs. This should, of course, be on top of the difference in premium that ought to be paid for a change of use of the site.
Even though Secretary for Environment, Transport and Works Sarah Liao Sau-tung has criticised the demolition plan as a flagrant violation of the environmental principles, she has overlooked the government's power to require the developers to conduct an environmental assessment study before being allowed to proceed. This, however, has to be gazetted six months before the demolition. Given the overwhelming public opposition to the demolition, the developers may not be able to push ahead with their plan within six months. Dr Liao has no time to lose, and should make it a priority to begin the legal process.
The government should also consider buying back the project for resale. Whether it can still make a profit, or would suffer a loss, has been rendered insignificant. The public's primary demand is to preserve the flats. Meanwhile, the officials who created this mess should be held accountable, to allay the growing public anger over the apparent collusion between the officials and the developers.
Albert Cheng King-hon is a directly elected legislator
