Land-sales system defence mounted

PUBLISHED : Tuesday, 14 March, 2006, 12:00am
UPDATED : Tuesday, 14 March, 2006, 12:00am

Changes to the list mechanism could destabilise market, warns official

The government says that allowing developers to initiate land sales rather than scheduling regular auctions best reflects market demand, and cautions that reforms to the existing land application list mechanism may destabilise property prices.

John Corrigall, a deputy director of the Lands Department, stressed that the current system was demand-driven and kept unnecessary land off the market.

'I am very happy with the current system, which enables developers, whenever they feel a need to buy land, to just do that,' Mr Corrigall said yesterday at a business and economic policy seminar, 'Selling Hong Kong's Land'.

'They can come to us, just like going down to the supermarket when you run out of lamb chops. You do not want the supermarket forcing lamb chops down your throat, do you?'

The seminar was organised by the University of Hong Kong and the South China Morning Post, and sponsored by the Citigroup Foundation.

Criticism of the land-sales system has mounted as developers have failed to trigger any sales since last September. This has raised public fears of a shrinking land supply - fears exacerbated by upward pressure on rents - and calls for reforms to make it easier for developers to trigger sales.

Chau Kwong-wing, chairman of the real estate and construction department at the University of Hong Kong, said there was no way of knowing for certain whether the recent lull in land sales was due to a lack of interest from developers or a failure to meet the government's undisclosed minimum reserve price for triggering a sale.

'If we have some sort of information on the reserve price, I think that would actually have the effect of further stabilising property prices because that would be an indication of what the government wants the price to be in the future.'

Hong Kong Institute of Surveyors vice-president Yu Kam-hung added that setting aside a number of sites for regular sales to complement the land application list system would help ease fears of a supply crunch.

However, Mr Corrigall noted that land supply was not restricted to the application list, as sites were also available via tender through the two rail companies and the Urban Renewal Authority.

According to Stephen Brown, director of the Civic Exchange think-tank, the real issue was not necessarily increasing land supply.

'I see no reason why we actually need much more raw land or development rights to be released anyway. The policy challenge is not whether or how you sell land. It is a much tougher one of getting the urban renovation and rejuvenation cycle working.'