Time to cut property cartel down to size
University of Hong Kong academics have proposed the government take back idle land in rural areas to meet housing demand – but not until 2047. But why wait till then, when the problem can be solved now
Who says local academics are timid? A new report by two University of Hong Kong scholars has made a provocative challenge to the property cartel. Lawrence Lai Wai-chung and Chau Kwong-wing, both professors at the Department of Real Estate and Construction, have proposed that the government take back privately owned idle rural land after their leases expire in 2047 under the Basic Law.
The reason is that Hong Kong needs a steady supply of land to build homes, and because what they call “ad hoc” strategies – redevelopment, rezoning, razing hillsides and building on the fringes of country parks – are not sustainable.
They estimate there are about 1,000 hectares of such land in the New Territories. Interestingly, an earlier warning by the Development Bureau claimed the city still needed 1,200 hectares of land – after 3,600 hectares had already been identified – if it was to meet housing demand by the end of the next decade. Public records show three of the largest developers in Hong Kong – Sun Hung Kai Properties, Henderson Land and CK Property – together hold about 760-plus hectares as land reserves in rural areas.
So, get those plots back and the problem is solved. Well, not quite. For one thing, the HKU proposal needs to wait till 2047, so it doesn’t go far enough. It will also scare a lot of people: what’s stopping the government from withdrawing the leaseholds of other properties after 2047, if it can take back rural land?
But surely pressure can be put on the big land owners now. A heavy tax on idle land can be easily imposed. The government can then offer to buy back the land. Alternatively, if developers agree to develop the land for mass market housing, with smaller profit margins – rather than aiming at the luxury end – they may be offered a discounted premium when converting farm land into residential development. The current sky-high conversion premiums – due to the overheated property market – are a huge disincentive for land owners to rezone and develop such sites on a mass scale.
In the past, the property cartel was untouchable, because Beijing thought its support was needed after Hong Kong’s return to Chinese sovereignty in 1997. Now, it’s clear the lopsided economic benefits it has enjoyed has contributed mightily to the social upheavals and economic dislocation of resources in society. They have lost the central government’s confidence. It’s time to apply the knife.