It ought to come as no surprise that the private owners of the Hunghom Peninsula have chosen to demolish and rebuild the housing project. The redevelopment option, after all, will bring the most profit, and we are talking about companies with shareholders to please. Renovations would have been unsatisfactory and resulted in a fraction of the returns, as would selling the flats as they are. Contrary to the companies' talk about weighing these options since the deal was struck in February, taking down all seven towers was always the likely outcome. And because the government turned over ownership and development rights, it has little room to manoeuvre, despite cries for it to do something. There are, of course, lessons to be learned here - and whatever redevelopment takes place has to be as socially and environmentally responsible as possible. No environmental controls made their way into the transfer agreement, as if no one expected Sun Hung Kai and New World Development to do what comes naturally. And the price was far too low. The developers paid a premium of less than $1 billion and agreed to give up nearly $2 billion in government-guaranteed income that was to have been generated by the sale of flats. The redevelopment premium paid was far below what the land alone could have fetched on the open market, and the new flats may generate a profit of up to $6 billion. Granted, negotiations started when the property market was in a slump, and there was the threat of legal action against the Housing Authority hanging in the air. But even as the market recovered and the government's bargaining position improved, it still did not manage to drive a harder bargain or recover more money for the public. The Hunghom patch is prime waterfront real estate. In an auction, it would have fetched a respectable price at the time the project began, and probably even more if it went under the hammer this past year. In truth, it should never have been used for subsidised housing, and the plan for the government to build and sell low-cost flats was misguided to begin with. The decision to get out of the sector was the correct one, but it left us with an anomaly of a housing complex. At 600 to 800 sq ft and built with less than premium materials, the flats were targeted at the middle income bracket. The government deemed the flats too fancy for subsidised rentals and ruled out conversion to hotel or holiday homes. So Hunghom Peninsula was sold and is now private property. Unfortunately, demand in the private housing market is for larger flats, better materials and more extensive clubhouse facilities. The environmental and ethical concerns of those who wish to stop the demolition are valid, but no objectors seem to be offering any legally or financially viable alternatives. This does not mean that pressure cannot or should not be brought to bear on the government to enforce environmental standards or that the developers are off the hook. If there is a silver lining to the controversy, it is the way in which the spotlight has been put on the wastefulness of our property industry. Construction is still the biggest source of landfill waste, with no charges imposed on the companies responsible. Since the long-delayed plan to impose landfill fees may not be ready in time for the Hunghom demolition, the developers have proposed donating $125 per tonne of dumped waste to green causes. That is a start, along with other recycling measures the developers propose. Perhaps the new attitude may rub off on other developers and projects, but continued public pressure will have to play a role. Corporations, designed to maximise profit, are unlikely to go green out of sheer altruism. The interest that environment minister Sarah Liao Sau-tung has taken in Hunghom is encouraging. We hope and expect the government will exercise its powers to minimise environmental and health fallout from the redevelopment.
