Without a long-term land bank, Hong Kong faces a development crisis

Regina Ip calls for a more aggressive government policy to ensure there is enough land for long-term needs, as a shortage will be the biggest obstacle to the city's development

PUBLISHED : Saturday, 19 September, 2015, 9:30am
UPDATED : Monday, 21 September, 2015, 5:57pm

Almost a year after Hong Kong's traumatic Occupy Central began, large-scale mass mobilisation to commemorate the anniversary seems unlikely. In the wider community, the feverish debates on constitutional development are being quietly overtaken by growing anxiety about Hong Kong's economic future.

In recent months, the downturn in mainland tourism and retail, as exemplified by the rising numbers of vacant shop premises, the pessimism of luxury retailers and the decline in commercial rentals, has sparked mounting concerns about Hong Kong's future as a tourism hub. Some retailers have remarked that the impending slump will be worse than that triggered by the severe acute respiratory syndrome epidemic of 2003.

The downtrend seems structural, and the government clueless in taking action to reverse it. Signs of a decline in residential property sales in the secondary market and falling rentals, following the financial turmoil in recent weeks, provide further telltale signs of gloom.

There is a lack of overall planning and coordination of Hong Kong's land requirements, and a lack of an innovative and effective action plan to remedy the shortage

What can the tourism industry do to regain lost ground? With Beijing officials speaking against reopening the floodgate to let in more mainland tourists, a repeat of the shot in the arm provided by mass mainland tourism in 2003 is unlikely to take place. Mass mainland tourism has indeed proved to be too much of a good thing, as the captive market has taken away Hong Kong's incentives to diversify and raise the bar in the standard of service, overseas publicity and promotion and, above all, in reinvestment in truly world-class tourism attractions.

Hong Kong compares poorly with rival cities in making large-scale investments to build forward-looking, state-of-the-art tourist attractions. Whereas Singapore had invested heavily in building its awe-inspiring Gardens by the Bay, and Guangdong's Chimelong Group has done likewise in building its massive Ocean Kingdom theme park and hotels in Hengqin , Hong Kong lacks innovative, large-scale tourism investments. With the opening next year of Shanghai's Disneyland theme park - three times the size of Disney's Hong Kong branch - our local theme parks stand to lose more business.

The lack of land for building new, major tourism attractions is the biggest hurdle. The problem is twofold: there is a general acute shortage of land for development in the medium and long term. Secondly, there is a lack of overall planning and coordination of Hong Kong's land requirements, and a lack of an innovative and effective action plan to remedy the shortage.

Based on public information, the government's land bank, as at June 2012, stands at a theoretical maximum of 391.5 hectares for residential/commercial development, 5.7 hectares for commercial development, and 167.7 hectares for industrial development, among others. A number which sticks out is the 932.9 hectares of land earmarked for "village type development". In accordance with the government's "small house policy" introduced in 1972, every indigenous male New Territories resident is entitled to apply for permission to build a three-storey "small house" of 700 sq ft in areas within the village environs.

The government declines to make an estimate of the size of the outstanding land entitlement for "small house" development. Yet it admits it is sitting on a backlog of 10,000 applications, a demand which it may never be able to meet without further undermining its land supply programme or upsetting urban dwellers.

As for the 167.7 hectares earmarked for industrial use, that includes rural-based land for low-density, low-value industrial use and open storage - in sum, many brownfield sites. Firm government action is required to clear the sites to release more land for development.

Where residential development is concerned, the government has identified 150 potential housing sites, yielding a maximum of 220,000 flats. The current administration has expended tremendous efforts to increase the supply of land for housing by increasing plot ratio and changing land use, but has run into fierce local objections in many parts of the city. The government has also laid out long-term plans for increasing land supply by building new towns, undertaking large-scale reclamation, making use of rock caverns, and relying on the MTR Corporation and the Urban Renewal Authority's developmental projects to fill the housing gap.

But as the production of new land easily needs at least two decades from the time preliminary studies are initiated, while large-scale reclamation takes even longer, the government will run into a severe land shortage in five years' time.

The government needs a more decisive and radical response by setting up a new, statutory lands development authority and equipping it with the necessary funds and statutory powers to build a long-term land bank. Land shortage is the most critical resource constraint hampering Hong Kong's development. Without a comprehensive vision of Hong Kong's land requirements and a long-term land bank, nothing much could be done by the government to resolve its hydra-headed developmental problems.

Regina Ip Lau Suk-yee is a legislator and chair of the New People's Party