In housing-starved Hong Kong, a way to tap developers’ land banks
Mike Rowse calls on the government to take charge and launch plans for more new towns in the New Territories – by doing deals, where necessary, with private owners of swathes of agricultural land
A recent speech at a breakfast meeting organised by the British Chamber of Commerce cast a new light on the land supply situation in Hong Kong, at least as far as I had previously understood it.
The speaker was Roger Nissim, formerly a senior official in the Lands Department, now an academic at Hong Kong University. His research shows that just three of our major property developers have amassed a combined land bank in the New Territories of over 90 million square feet designated for agricultural use. According to their most recent annual reports, Henderson, Sun Hung Kai Properties and New World have acquired 44.5 million, 30 million and 18 million square feet respectively.
Without a long-term land bank, Hong Kong faces a development crisis
Taken together with lesser holdings by other developers, it is clear that a total of well over 100 million square feet has been squirrelled away awaiting development opportunities. Space on this scale, if utilised properly, would have a major beneficial impact on Hong Kong’s housing situation.
Two things need to happen before the land can be put to more productive use. First, the zoning needs to be changed to something more appropriate, such as residential or commercial. Second, the designated use of the land as specified in the lease needs to be amended, after payment of a suitable modification premium to the government.
Hong Kong has enough money and land, but no guts or will to solve its housing crisis
The way our system works at present, the timing of development of this huge resource is left largely in the hands of the developers. With their expert knowledge of the property market cycle, they will seek Town Planning Board approval to amend the zoning and agree on the modification premium with the Lands Department at a time when land prices are low, so as to minimise their outlay. Ideally, they will also be bringing the completed properties onto the market for sale at a time when prices are high.