It is time to change the government's land sales system: it has passed its 'sell-by' date. There is a general sense that the government must sell land constantly to earn revenue, because the Treasury needs money to pay for public spending. This picture is, in fact, not quite accurate.
Apart from land auctions, much of the government's land revenue comes from the lease modifications for privately owned land. The prices of lease modifications are negotiated between developers and the government. For example, developers in effect exchange agricultural land leases they bought for new, commercial or residential leases.
There is plenty of leased land in private hands that can be restructured for redevelopment. In other words, there is plenty of potential lease-modification income for the government. So, even if it does not sell more land, the government will still have many opportunities to generate income from land transactions.
The problem with these private negotiations on lease modification is that the agreed payments are not disclosed. So the market does not know the real value of land in Hong Kong.
The first point, therefore, is that Hong Kong needs to make this process much more transparent. Would it be too difficult to disclose the price of lease modifications?
After all, apart from a few plots, the government owns all the land in Hong Kong, which it holds on trust for the nation and the people.
