Hong Kong’s shortage of land for residential use will be 108 hectares by 2026 and 230 hectares by 2046, according to the government’s Task Force on Land Supply. Photo: Bloomberg
Concrete Analysis
by Frank Wong
Concrete Analysis
by Frank Wong

Can Hong Kong increase its housing supply through the Land Sharing Pilot Scheme?

  • The scheme can potentially unlock 150 hectares of land by changing land zoning and incentivising landowners
  • The scheme might increase a piece of land’s plot ratio times its current size

A part of the government’s short to medium-term strategy to ease the land and housing demand in Hong Kong, the Land Sharing Pilot Scheme can potentially unlock 150 hectares of land by changing land zoning and incentivising landowners by providing them with more than four times the plot ratio of the original zoning.

Under the scheme, the government will facilitate the provision and improvement of public infrastructure and Government, Institution or Community facilities, as well as shorten the statutory processing time, which cannot be achieved solely by private developers.

The government’s Task Force on Land Supply estimated that shortage of land for residential use would be 108 hectares by 2026 and 230 hectares by 2046. The government has been looking into means of increasing housing supply by 600,000 units in a staged approach. In the short term, the government intends to optimise existing public housing estates through infill development. In the long term, the study on Lantau Tomorrow is a positive strategy to satisfy the housing demand.

The scheme seeks to complement the government’s grand blueprint for the medium-term housing supply. It seems reasonable. But when it comes to implementation, is it attractive enough for developers? From their perspective, the question is whether it is worth exercising resources and developing their land under the scheme.

For instance, the current statutory plot ratio restriction for recreational land is 0.2 times. Through the scheme, the land’s development potential might be increased to a plot ratio three times the current size. After this, 70 per cent will be set side for public housing, while 30 per cent will belong to private developers for private development. Irrespective of whether it is a domestic or non-domestic plot ratio, the original 0.2 times will be increased to 0.9 times for the project proponent or private developer.

Whether the more than four times increase in plot ratio is attractive enough for developers to join the scheme remains to be seen. Developers, who are profit driven, might not necessarily be willing to develop private housing next to public housing or starter homes, and might consider the scheme’s incentives only marginally sufficient. Yet it provides some kind of motivation for developers to consider.

Will the scheme impact planning logic? As it is more of an interim approach to tackling the housing demand in the short to medium term by increasing a land’s development potential to its fullest scale, it could be a challenge to traditional planning logic. Projects covered by the scheme within the same district without a comprehensive plan might result in repetitive provision of public infrastructure and facilities that are similar in nature, which might affect the efficiency of the scheme. An increase in development potential might also require that the relationship between urban core areas and their fringe areas be considered. In this regard, the Panel of Advisors and Town Planning Board will play the crucial role of safeguarding the scheme, and ensuring that projects under it do not deviate too much from traditional planning logic, and thus affecting the overall planning of the district or the efficiency of the scheme. The challenge seems surmountable.

Much of the success of the scheme depends on the freehand given to the newly created Land Sharing Office (LSO). The LSO requires a high degree of collaboration among different governmental departments, working at both the policy level and the departmental level to effectively shorten the development time frame.

However, whether the departments still have capabilities to shorten their statutory processing times remains uncertain. Notwithstanding, theoretically, a freehanded approach with clear policy objectives will definitely help boost the process.

The removal of brownfield activity for housing developments might have a subsequent socio-economic impact. In addition to the government’s plans and mechanisms to facilitate the relocation of these brownfield activities, tapping the resources of the developers to accelerate the brownfield development process could also be an effective way of unlocking the potential of brownfields for the scheme.

Is the scheme worth implementing for 150 hectares of developable land? We believe that any concerns arising will be surmountable, and the scheme, as part of a grand blueprint, will play a vital role in providing land supply as a timely response to Hong Kong’s housing shortage.

Frank Wong is managing partner of planning and development at Pruden Group

This article appeared in the South China Morning Post print edition as: Land plan can boost the supply of homes