When Adrian Cheng Chi-kong, the third-generation scion of one of Hong Kong’s biggest landowners, met Ricky Yu in 2016, the seed of an unorthodox idea was planted. Yu, founder of the non-profit builder Light Be , was looking for land to build what his six-year-old group calls social housing, including co-tenancy abodes for single mothers with children. Cheng, then 37, was vice-chairman of one of Hong Kong’s largest developers, owning 12 million sq ft of land, not including another 17 million sq ft of farmland. Over the next two years, their friendship grew, as did their idea of using private land for social homes to ease Hong Kong’s chronic housing woes, culminating in a 2018 pact to work together, according to people familiar with the matter. Last week, their collaboration bore fruit, when Cheng announced that New World Development Limited – founded in 1970 by his late grandfather Cheng Yu-tung – would donate nearly a fifth of its agricultural land holdings to Hong Kong’s government and non-profit organisations, including Light Be, for building social homes. Yu’s group would receive 1 million sq ft, of which the first 28,000 sq ft will be turned into 100 homes. All in, New World gave away 3 million sq ft of land, equivalent to 28 hectares, or 60 football fields if they were contiguous. “In today’s business world, corporations cannot live by just maximising their profits, but must also have the obligation to take care of different stakeholders of society,” Cheng said during New World’s annual results press conference in Hong Kong, at which he announced the land giveaway. The donation, criticised by gadfly analyst David Webb but cheered by the markets with a 2 per cent gain in New World’s stock price after Cheng’s announcement, marks a turning point for the city’s real estate developers, as their roles and outsize profits have come under intense scrutiny in one of the world’s least affordable home markets. Hong Kong society has been torn apart by the worst political crisis in the city’s history. Three months of unprecedented protests have hammered the economy, causing real estate prices to slide, while visitors stayed away and retail sales shrank, putting the city on path to a technical recession in the fiscal third quarter starting in October. What began as a peaceful march by an estimated 1 million people on June 9 to oppose a controversial extradition bill has descended into rowdy rallies almost every day across the city, often involving clashes between police and protesters. Even though Hong Kong’s Chief Executive Carrie Lam Cheng Yuet-ngor withdrew the unpopular bill , the protests persisted, fuelled by a rage against local authorities for their ineffectiveness in addressing the most pressing issues affecting Hong Kong life: housing, job satisfaction, a yawning income gap, education and future prospects. Amid all the disquiet are four families, each in control of a sprawling conglomerate that touches most aspects of Hong Kong life – from housing to transport and education, retail sales to telephony and utilities – at the core of which sits a real estate company. Together with Sino Land, these five developers build one of every two private-sector homes sold in the city. Apart from the Chengs of New World, the biggest developers in Hong Kong are the Lee family of Henderson Land Development, the Kwoks of Sun Hung Kai Properties (SHKP), and CK Asset Holdings of tycoon Li Ka-shing . Their collective wealth ballooned during Hong Kong’s property bull market, as a decade of cheap loans fuelled a yearning for homes that drove prices to rise fivefold since 2003. Eighteen, or 36 per cent, of the 50 richest people in Hong Kong in 2019 were property tycoons, according to Forbes . Li, known in Hong Kong as “Superman” for his deal-making prowess, has been the city’s wealthiest man for decades, with his fortune estimated at US$31.7 billion last year. Henderson’s nonagenarian founder Lee Shau-kee is Hong Kong’s second-richest tycoon, while the Kwoks are the city’s fifth-wealthiest. While their wealth grew, the rest of Hong Kong struggled, as spiralling rental prices and mortgages weighed on household incomes, while average living space shrank. A record 1.38 million residents were below the poverty line last year, with incomes as low as HK$4,000 (US$510) a month, according to government data. “Simply and bluntly put, Hong Kong people are divided into two classes: property owners and those without,” said Kevin Tsui, an associate professor at the Clemson University’s College of Business in South Carolina. “As time goes by, the wealth gap gets wider, and non-property owners gradually get frustrated. They live in despair without seeing the future.” Hong Kong’s government depends on land sales to augment its narrow tax base, with land premiums and stamp duties projected to make up 33 per cent , or more than HK$197 billion (US$25.2 billion), of the government’s income in the financial year that began on April 1. “The government is partly to blame for the high land prices, because it has not added anything to the land supply in the past 20 years,” said Nicholas Brooke, chairman of Professional Property Services, an industry consultancy. “The developers grew bigger as they just made maximum use of the opportunities provided by the government’s restraint on the land supply.” Hong Kong’s developers control an estimated 100 million sq ft of farmland. Henderson ’s Lee and SHKP’s late founder Kwok Tak-seng typify the rags-to-riches stories among the developers. With profits earned in the twilight of their careers, they began buying farmland in the New Territories during the 1970s for as little as HK$10 per sq ft. Over the years, the land value would increase, rising to HK$1,348 by 2018, based on the government’s compensation to developers. The asking price even soared to HK$3,100 per sq ft during a failed auction in July of farmland in the area. SHKP benefited handsomely from its late founder’s foresight. Its Park Yoho and Grand Yoho projects, built on converted farmland bought years earlier in Yuen Long, have now turned into a teeming residential neighbourhood with 5,500 apartments and a total sales value of more than HK$45 billion (US$5.74 billion), according to brokerage firm CGS-CIMB’s Hong Kong research head, Raymond Cheng. One flat recently sold for HK$17.5 million, or HK$22,435 per sq ft. “Converting farmland into residential projects always a cheaper way for acquiring land,” said Chiu Kam-kuen, an international director and chief executive of Cushman & Wakefield Greater China. Henderson’s purchases picked up pace last decade, with its farmland reserves ballooning by 91 per cent to 45.9 million sq ft in 2019, from 24 million sq ft a decade earlier. “There was no comprehensive planning for rural land three or four decades ago, so savvy developers started to acquire farmland, betting that these parcels could be rezoned for residential use,” said Albert So Chun-hin, the former District Lands Officer of the North District, which encompasses the New Territories including Fanling and Sheung Shui. Plots big enough for 500,000 sq ft to 1 million sq ft in gross floor area become viable for use as housing projects and the developer can seek government approval for conversion into homes. SHKP did turn its land bank near the Mai Po wetlands in Yuen Long into Palm Springs, a community of 980 free-standing detached houses. A unit there sold in July for HK$16.38 million after a 9 per cent discount , just as Hong Kong’s protests entered their second month. The land-hoarding caught the attention of China’s state-run media, which have begun to weigh in on Hong Kong’s protests, and the housing problem they consider to be at the heart of the public’s grievances. The Communist Party mouthpiece People’s Daily and its more strident offshoot Global Times inveighed Hong Kong’s developers and their vested interests as the “cause” of why many disaffected youth are rampaging through the city’s streets. In strongly-worded commentaries, the newspapers urged Hong Kong’s government to seize land from the developers and turn them into public housing. The papers specifically endorsed a proposal by the pro-Beijing political party DAB to use the Lands Resumption Ordinance , a law that traces its roots to 1924 during Hong Kong’s days as a British colony, to obtain the land. “Developers have come under pressure to make some meaningful gesture,” said Brooke, adding that developers should offer their farmland at cost in exchange for about half of the plots’ gross floor area for private homes. “If not, the government should use the Lands Resumption Ordinance to take back land for public housing.” After New World’s giveaway, Henderson said it would yield to any government seizure of farmland that has already been zoned for public housing, handing over up to 1 million square feet in Fanling near Hong Kong’s border with Shenzhen for public housing. “We will cooperate with the government if it invokes the Lands Resumption Ordinance to take back the land we own,” Henderson said in a written response last week to queries by the South China Morning Post . SHKP, Hong Kong’s biggest land owner and real estate firm by market value, fell in line too , saying that it would support the government’s land seizure as long as it received “reasonable compensation”, and provided that the land was not earmarked for “private housing or commercial development purposes”. The developer, which has completed 23 per cent of Hong Kong’s private homes in the past five years, rejected any suggestions of a hegemony in real estate as “a myth”. “We have to invest even in a depressed market and we just do our best to build quality housing,” said the developer’s deputy managing director Wong Chik-wing. “Property prices are determined by supply and demand. Asset appreciation is also contributed by the excessive liquidity.” CK Asset was a little more circumspect, saying that it would “study the matter”, as any plan to turn farmland into homes “may take some time for the needy to benefit”, it said in a statement after New World’s donation, pointing out that Li’s foundation had given away HK$25 billion over the years to a range of charities. With at least three of the four largest landowners falling into line, has the tipping point arrived for Hong Kong’s property market? “The key question is whether this free land will be suitable for housing development,” said the former lands officer So. “If the donated land sits in the green belt, that would not be viable for housing development.”