Property analysts say implementing a proposal by Lee Shau-kee, chairman of Henderson Land, to build low-priced homes in the New Territories will not be easy.
Speaking on the sidelines of a public event at the Lee Shau Kee Lecture Centre at the University of Hong Kong on Sunday, Lee said Henderson Land would consider building 300 sq ft flats in the New Territories at prices of HK$1 million each if the government waived the land premium levy on farmland modifications.
Responding to the proposal, Professor Chau Kwong-wing, of the University of Hong Kong's department of real estate and construction, said the resultant development would be similar to the government's subsidised housing programme.
"Determining how much a developer might expect to earn from such a project will be a challenge. If prices are set too high, they will be criticised by the public. If they are too low, developers will not be interested in building the project," he said.
"Balancing these competing interests will be difficult in the current political environment."
Polytechnic University real estate professor Eddie Hui Chi-man agreed that the proposal could be difficult to implement. Since farmland areas were not well served by transport connections, the government would be required to make the necessary infrastructure investments to make the land accessible.
Vincent Cheung Kiu-cho, national director of Greater China at surveying firm Cushman & Wakefield, said: "If the location is not easily accessible, no one would want to buy flats even if they were priced cheaply."
Furthermore, added Cheung, not all farmland could be easily rezoned for residential use.
"If a site is restricted for farmland use on a land lease, there is no mechanism for landlords to change the land use," he said. "Only sites currently zoned for open space or open storage have that flexibility."
Cheung also worried that any relaxation to present land use could cause a chain reaction in town planning provisions.
"If the government allowed farmland to be converted into residential use, individual owners nearby would question why their sites could not also be converted into residential use," he said. And the impact of such changes would be another matter to be considered.
"It is also impossible to set limits to the selling prices of flats on a land lease. So the solution may be for a developer of such a scheme to sell the whole project to the government, which will be in a better position to control selling prices," Cheung said.
"This would make the scheme similar to the Home Ownership Scheme."
On a positive note, Cheung pointed out that developers could build flats faster than the government.