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Hong Kong housing

Hong Kong’s housing crisis can’t be solved by democratic consensus

Lau Ping Cheung says public objection alone is not a good reason to reject reclamation and other contentious ideas if they have merit, while private developers must also play their part to ease the land shortage

PUBLISHED : Monday, 18 September, 2017, 5:07pm
UPDATED : Monday, 18 September, 2017, 7:16pm

Hong Kong needs land for housing. Given that 76 per cent of the city’s 1,106 sq km territory is still undeveloped, we do not lack land for development per se. What we do lack is a consensus on where the land should come from.

Based on the government’s “Hong Kong 2030 Plus” development strategy, the city needs 4,800 hectares of land to meet its housing and development needs, but can find only 3,600 hectares, leaving a shortfall of 1,200 hectares.

At its first meeting recently, the 30-member task force set up by Chief Executive Carrie Lam Cheng Yuet-ngor to find developable land listed 12 viable options for study. These include developing the land on the fringes of protected country parks; reclamation outside Victoria Harbour, particularly the sea off Lantau Island; speeding up the development of comprehensive development areas; and the relocation of the Kwai Tsing Container Terminals, or building housing above the terminals. Public consultations will follow once the panel has completed its study.

It’s obvious that reclamation outside Victoria Harbour and the development of some peripheral areas of country parks – the two options the chief executive has put weight on – will be highly contentious.

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But is a contentious proposal necessarily inappropriate? Requiring a consensus by way of the Western democratic system often disregards sound judgment; “majority rule” may mean “majority ruins”. A good example would be the election of US President Donald Trump, an apparent racist, misogynist, xenophobe and climate change denier who won the presidency in a democratic election. Likewise Brexit, with its jaw-dropping verdict in favour of a UK exit from the European Union.

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It’s safe to say that any result by “majority rule” is utterly subjective. For instance, what if we were to hold a public referendum on the abolition of the tax system? My guess is that the majority would vote in favour of it, never mind the consequent collapse of the whole socio-economic system.

Among the 12 options raised by the task force, the parcels of land zoned as comprehensive development areas can potentially yield a substantial amount of land for housing.

In a designated comprehensive development area, individual sites cannot be developed or redeveloped without approval for a master plan for the whole area. When multiple owners are involved in one area, it is extremely difficult, if not impossible, to get plans moving, let alone amass the financing and expertise needed for development.

Some estimate there could be more than 100 comprehensive development areas idling all over Hong Kong, with some 600 hectares of land being frozen, many for years. For example, the 4.76-hectare site adjacent to Man Yiu Street in Central, part of the Central harbourfront development, has been idling for 17 years. If developed, it could provide 1.7 million sq ft of grade A office space. Ironically, the Man Yiu Street comprehensive development area involves just a single owner – the Hong Kong government.

Beyond the task force’s 12 options, the land banks of private owners should not be overlooked. I have argued in the past that it is important to expedite land rezoning and lease modification, to release more privately owned, non-residential land – such as deserted farmland and fish farms – for redevelopment.

In 2010, the land released as a result of such rezoning exercise totalled about 6.7 million sq ft of floor space, which translated into some 13,000 residential units of 500 sq ft each. A year later, such rezoning made available 5.4 million sq ft of floor space, or about 11,000 residential units.

In subsequent years, however, the numbers have dwindled to a few hundred, thanks mainly to government bureaucracy. Why let this private land sit there idle, when it can be released into the market to alleviate our housing shortage?

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The land premium assessment process is contributing to the bureaucratic hold-up and must be simplified. Where a land lease modification – say, from agricultural use to residential or commercial use – confers an increase in land value, the government requires that the land owner or developer pay a premium to the Lands Department. The negotiation between the Lands Department and the land owner, however, is strictly private and non-transparent, so that other land owners are clueless about the amount of premium paid. Without a benchmark, such negotiations are often prolonged and uncertain.

With more than 1,000 hectares of land currently in the hands of private developers, as has been widely reported, it is imperative that the land premium assessment system is improved. One possible way to expedite negotiations is to fix the land premiums for different districts for a period of time, to be reviewed later to accommodate market changes.

Let’s get realistic about Hong Kong’s housing shortage

One idea outside the official list of 12 also deserves mention. Many people support the development of brownfield sites, but they seem to have forgotten that most brownfield sites are privately owned and distributed all over the city. Brownfield sites are deserted land used mostly for open storage, container yards, depots, rural industries and recycling yards. Before they can be put to residential use, there needs to be a process of land resumption and clearance, compensation, and relocation arrangements.

The government is not shying away from this option. The Planning Department, in its proposed Hung Shui Kiu new development area project, is looking to earmark 24 hectares of land for port backup, storage and workshops, including multistoried buildings to relocate and accommodate some of the affected brownfield operations. But any resumption and relocation will inevitably be difficult, slow and sometimes confrontational.

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And then there is reclamation. What seems to be inevitable to some is a big no-no to others. With just 6 per cent of its land derived from reclamation, Hong Kong’s figure is dwarfed in comparison with neighbouring Macau, where a whopping 60 per cent of land came from reclamation, or with Singapore or the Netherlands, each of which has derived some 20 per cent of their land from reclamation.

Tackling the land shortage is not solely the responsibility of the government

Remarkably, about 70 per cent of Hong Kong’s commercial activities take place on reclaimed land, and, taking into account that the Hong Kong International Airport sits on reclaimed land, Hong Kong’s status as a commercial hub and travel destination has land reclamation to thank. Additionally, Hong Kong’s nine new towns, home to 3.5 million people, were largely created on reclaimed land and countryside. These are remarkable statistics. Yet, in their fervent opposition to land reclamation, some people have very conveniently shoved them under the table.

Tackling the land shortage is not solely the responsibility of the government. We also need private owners to release their land, and for the community as a whole to demonstrate sensible judgment and prioritise society’s well-being. And, adopting a pragmatic, scientific approach is just as important as forging a public consensus. After all, a louder and seemingly democratic voice does not necessarily make the majority vote a sensible one, or one with the people’s best interests in mind.

Lau Ping Cheung is a member of the Economic Development Commission and convenor of its working group on professional services