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Losing the plot: is 'tight' land supply just a myth?

While officials blame 'tight' land supply for soaring property prices, developments that could ease the strain on housing are being held back

PUBLISHED : Friday, 09 November, 2012, 12:00am
UPDATED : Friday, 09 November, 2012, 4:04am

When officials keep on saying property prices are skyrocketing because "land supply is tight", it begs the question: just how much land is there left to build on?

The information released recently has been fragmented and sometimes misleading, like the Development Bureau's claim that vacant public land zoned for urban housing amounted to only 391 hectares. What's more, said the bureau, this was scattered around the city in plots too small to support larger developments.

This incorrect figure was cited to justify the controversial three-town project in the northeastern New Territories.

The bureau had left out a number of major supply sources, including MTR Corporation sites, projects underway by private developers and the Urban Renewal Authority, plus the hundreds of hectares of land under planning. Then there is the massive land bank held by private developers.

The figure of 391 hectares refers only to vacant government land in urban areas zoned for residential use. But a rough estimate by the South China Morning Post found that just the key readily available sources of land supply alone could yield more than 86,851 units, mostly in the private sector, in the coming decade.

The estimates have not taken into account planned public and private housing projects, for which comprehensive information is lacking.

In addition, in the long term, at least 1,667 hectares of land will be available for development. If only 1,000 hectares of this was used for actual housing, under the government's plot ratio of 5, it could yield 897,000 units of 600 sq ft. That's about 100,000 more flats than the stock of public rental housing.

Strangely, recent discussions have hardly touched on these large-scale private projects that have been stuck in the town planning process because of technicalities and bureaucracy.

Critics say official co-ordination is needed to speed up the progress of these projects.

An examination of Town Planning Board papers by the Post found applications for a handful of private sites zoned as "comprehensive development areas" - which usually involves large sites and includes a mix of residential and other land uses - have dragged on for years.

The Yau Tong Bay project is one example. A consortium led by Henderson Land Development has acquired 80 per cent of the property interests, but the project has still to be approved by the board after the developers applied for deferral for the tenth time in July.

The plan to transform the old industrial area on the harbour front in east Kowloon first was first proposed about two decades ago and it is currently designed to create more than 5,700 flats - more than a quarter of the government's annual housing production target.

The developers have met objections from minority owners; they have also changed the design over the years; and in the latest submission, they scratched a marina after it was found to be technically impossible and replaced it with a hotel.

They have now asked for time to conduct assessments on traffic impact, air ventilation, landscape and other issues. The plans were due to be resubmitted in three months. That has now fallen due but there is no sign of it going back before the board yet.

Another example is a huge rural site, of 64.5 hectares, at Sai Sha Road in Sai Kung, where Sun Hung Kai Properties has been struggling to deliver a low-density luxury residential scheme of 4,900 units. It first won board approval in 2003 but has tabled several amendments since. It has yet to comply with the conditions for protecting the environment.

There are different views among housing advisers about how to remedy the slow progress of private projects. Fred Li Wah-ming, a member of the Long Term Housing Strategy Committee, said the government should ensure better co-ordination between departments to streamline the vetting procedure.

"These projects often involve different stakeholders," said Li, a former lawmaker of the Kowloon East geographical constituency. "Like the Yau Tong project. In the beginning there were objections from local waste recyclers and industrial building owners, then town planners asked for a lower building density in the area. It's been rounds and rounds of negotiation."

He said the government could have an agency, similar to the last administration's Development Opportunities Office, set up to facilitate private projects deemed to be of benefit to the community and the economy.

Li dismissed potential accusations of "government-business collusion" in the event of the authorities establishing a powerful office to help developers overcome planning obstacles.

"They would prefer officials to take real action to speed up housing supply," Li said. "Otherwise they'll easily fall short of whatever housing target they set."

However, Stanley Wong Yuen-fai, vice-chairman of the Town Planning Board, advised caution. "That office had a bottom line of only serving projects with a public gain, and any new office should likewise stay away from purely commercial projects by private developers."

Wong said the "comprehensive development area" zoning tag was intended to ensure the board could closely monitor such projects - which usually involved change of use, for example, from industrial to residential - for misplanning and environmental damage. "The zoning requires the project developer to conduct various impact assessments and to provide facilities lacking in the community, such as an elderly home or a public transport hub," he said. "Inevitably, this will take a much longer time than for a pure residential zone."

Not every developer gives a clear breakdown of what land they hold in urban areas and the New Territories.

Cheung Kong (Holdings) for example, says it has 40 million sq ft of buildable floor space for residential and commercial uses, while Sun Hung Kai Properties says it has 46.6 million for both uses. It is unclear whether the amounts included agricultural land they may have acquired. Henderson Land said it had 20.7 million sq ft of residential and commercial space and 42.4 million sq ft of farmland.

The government could help facilitate private developers to develop their stock of agricultural land, said surveyor Raymond Chan Yuk-ming, a former Town Planning Board member. "It is a misconception the developers don't want to develop the agricultural land they acquired. It's just that the current condition of the land doesn't allow it because of a lack of infrastructure," said Chan.

"Incentives could be given," he added. For example, a road could be built to connect a rural site prior to development, and the developer should be willing to pay for the rise in land value. The land value negotiation process with the government should also be streamlined, Chan said.

Last but not least is the officials' failure to include one of the city's biggest landlords in that figure of 391 hectares: the MTR Corporation. And all of its sites are, or are due to be, served by one of the city's best transport links - trains.

The railway company boasts at least 16.3 million square feet of gross floor area from three areas that contain development projects to be put out to tender in the next eight years. They are: the remaining land surrounding the Lohas Park station, which has a capacity for up to 10 housing projects (after Cheung Kong secured three developments there in the past few years); Wong Chuk Hang depot on the South Island Line, and Ho Man Tin station on the Shatin-Central Link.

Of the three, only Lohas Park station is already served by trains, while lines to the other two sites are under construction. Yet the MTR has said it will take four years to tender out all the remaining projects at Lohas Park.

Li said: "I suspect the timetable is more about maximising profit than technical considerations. The flats built atop the stations can be sold more dearly when they are really served by trains, and the MTR wouldn't want to launch all the sites to flood the market," he said. "But of course, the sites can always be granted earlier and the homes be sold prior to completion earlier."

At present, developers are allowed to put flats up for sale 20 months before completion. Industry players have called for extending the pre-sale period.

The MTR Corporation said last night that the remaining packages of Lohas Park were "under review". It said the entire site around Lohas Park station, together with the Tseung Kwan O depot, will provide 21,500 flats in phases. So far 8,000 units have been, or are being, built.

As for whether the projects at Ho Man Tin and Wong Chuk Hang sites can be brought forward, the MTR said it had begun initial planning but added: "Subject to market conditions, property developments above the railway facilities will be implemented after the completion of the new lines."

 

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honkiepanky
This is some nice journalism. Well done.

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