Developers benefit when there's a lot at stake

PUBLISHED : Sunday, 28 March, 2010, 12:00am
UPDATED : Sunday, 28 March, 2010, 12:00am

The decision to lower the compulsory purchase threshold of a building from 90 per cent to 80 per cent of its flat owners - allegedly to encourage the redevelopment of residential buildings over 50 years of age and industrial ones over 30 years - is not just another gift to big developers. It sets up many new opportunities for the government bodies involved to provide interpretations of and loopholes in the laws to offer further goodies to developers with the necessary influence. There are two reasons, apart from individuals' rights to their own homes, why this is unjust and ultimately stupid, given the rapid ageing of Hong Kong's housing stock.

The first is that, although the official announcement of the law change referred to 80 per cent of 'a lot', the law itself defines a lot not just as a whole lot but as any section or subsection of a lot. Just how much room this gives for 'interpretation' of what will count as 80 per cent is illustrated by the building in which I live. Though it consists of only 14 flats, it is divided into three sections. The whole lot comprises two buildings divided into several more sections and comprising some 22 flats.

So it is quite possible that half or two-thirds of one of the buildings will be redeveloped without reference to the other portion. This is the kind of nonsense that developers, with their inside knowledge of the departments (because they employ so many former officials) and hefty legal resources can exploit. It also makes nonsense of rational urban planning, which would require that any redevelopment embrace the whole of the lot.

The ageing issue will loom very large over the next decade or so. The design life of Hong Kong buildings is, says the government itself, just 50 years. This may say a lot about construction standards - or reveal the implicit belief that buildings should not last longer as they will need to make way for even taller ones and ever higher urban density, regardless of health and environmental factors.

Hong Kong's peak for housing construction lasted some 25 years, beginning around 1960, so there will soon be a huge surge in the numbers of 50-year-old buildings. In 1965, there were already 286,000 permanent, private-sector units. Government data now shows that, at the end of 2008, 36,000 pre-1960 units were still part of the private housing stock and 153,000 were from the 1960s. From an average of 13,000 completions a year in the 1960s, private-sector construction surged to 20,353 units in the 1970s, rising to a peak of 29,427 in the 1980s.

By contrast, the past five years have seen near stagnation in the private housing stock - now 1.1 million, with completions averaging a mere 14,000 a year in the five years ending in 2008.

Demolitions in the past five years have been averaging only 900 units. So, even if the number rises dramatically, they will have scant impact on the total stock of buildings over 50 years old. In other words, this change can help a few developers make good profits from the forced redevelopment of well-located old buildings, but do nothing for the bigger problem of building age and condition.

Under these circumstances, the correct policy would be proper enforcement of building regulations to ensure that old buildings are made structurally sound or required to be redeveloped if that cannot be done. It should be accompanied by the provision of new public housing in urban areas for displaced, long-term residents, rather than dumping them on the city margins.

But what can you expect when this small city shamefully and shamelessly boasts seven among the top 150 richest people in the world - wealth gouged from the populace thanks to government policies? Or from government officials who turn a blind eye to blatantly dishonest advertising and price manipulation by some developers. Are they waiting for a job offer?

Philip Bowring is a Hong Kong-based journalist and commentator