CONCRETE ANALYSIS
Concrete Analysis
by

Using Hong Kong’s country parks may be one way to solve its housing supply problem

PUBLISHED : Tuesday, 25 October, 2016, 3:01pm
UPDATED : Wednesday, 26 October, 2016, 5:07pm

The complaint from a young legislative Council member over lack of space for intimacy arouses hot debate on housing supply again. Paul Chan Mo-po, the secretary for development, repeatedly urges support to the government’s initiatives to supply more land for housing development.

Strictly speaking, land supply should never be a problem in Hong Kong as no more than 20 per cent of the territory is developed. The essence of the problem is land use planning as more than half of the area of Hong Kong has zoning that prohibits development.

Apart from developed areas clustered around both sides of the harbour and a number of new towns, the majority of undeveloped land is either “brown land” or country parks. The housing shortage will end if brown land and country parks can be fully used to fuel housing supply.

Country park lovers naturally prefer that brown land is developed. However, this is not as easy as many people think. Most brown land is currently used for various purposes essential to Hong Kong’s economy, such as container storage, parking for trucks and construction equipment and industrial uses which require large open space. Brown land cannot be developed without these uses being moved to other locations so as not to cause interruption to their activities and adversely affect their workers.

Country park lovers naturally prefer that brown land is developed. However, this is not as easy as many people think

Some people have suggested putting these activities in multi-storey structures. Paradoxically, any land available for such multi-storey structures to allow for brown land use could be used for residential development instead, if available.

Ownership is another headache for the government. Brown land owners cover the spectrum from indigenous villagers to major developers, some holding large plots at more than 100,000 square feet while others have plots of just a few hundred or thousand square feet each. Moreover, the objectives of these owners are also quite diverse, from self-occupation to land holding for future development.

This diversified ownership renders cooperation among owners for large scale development on their own difficult. Infrastructure supporting such large scale developments requires the support of land owners. Government may develop brown land on its own through land resumption but this option is costly and attracts litigation which drags down the whole process.

Even though the government can facilitate development of brown land through town planning, it cannot compel land owners to develop their land. Most brown land is held under government leases for agricultural use only and hence any residential development requires lease modification and payment of premium.

To avoid allegations of collusion with developers, government officials assess premium aggressively leaving developers with thin profit margins on developments. The government pays about HK$1,000 per square foot for resumption of agricultural land but assesses the value of agricultural land at no more than HK$300 per square foot in its premium calculation. Hence developers are no longer keen to convert brown land to residential use.

On the other hand, development of country parks does not involve ownership problems or the moving of existing users. More than 40 per cent of Hong Kong is occupied by country parks. Within these are water catchment areas of reservoirs which are inaccessible. However, some of these reservoirs could be abandoned in the light of abundant water supply from the north. Development of such areas would have no material effect on the enjoyment of country park lovers. Use of just a few per cent of our country parks is enough for 10 years of housing supply.

Youngsters blame the government for high residential prices. But price levels will never come down without adequate land supply for building homes. If we want lower house prices or more living space, we should support the government over the development of country parks.

Charles Chan is the managing director of Savills Valuation and Professional Services