Exclusive | Henderson offers 1 million sq ft of Fanling farmland for public homes, saying it would yield to any seizure by Hong Kong’s government of private land
- Henderson Land Development says it would offer three plots of land totalling 1 million square feet in Fanling north for public housing if the government seizes the land under the Lands Resumption Ordinance
- Government says it will take back 68 hectares of private farmland in the northern New Territories on which 21,000 new homes will be built
Henderson Land Development, the third-biggest private landowner in Hong Kong, said it would yield to any government seizure of private land for public housing, a day after New World Development donated a fifth of its farmland reserves.
Henderson’s concession came as the Lands Department announced plans to take back 784 plots of private farmland covering 68 hectares (7.3 million square feet) in the northern New Territories, on which 21,000 new homes will be built in the first phase.
Henderson said it owned 1 million sq ft, or 14 per cent, of the land to be taken back by the government.
Michael Wong Wai-lun, the city’s Secretary for Development, said on Thursday the government will aim to take ownership of 400 hectares of private land under the Lands Resumption Ordinance over the next five years. Its quarterly land-sale programme, also unveiled on Thursday, revealed plans to release two plots yielding 980 units – down 27 per cent from the previous quarter.
Hong Kong’s authorities and its big developers have come under intense pressure lately from Chinese state-owned media to free up land to alleviate the housing crisis – something Beijing is blaming for the unprecedented civil unrest that has engulfed the city.
Henderson’s statement points to a softening stance among the developers, who previously would have fought back against any attempted land seizure and used judicial reviews to get the highest possible compensation.
In a statement on Thursday, Sun Hung Kai Properties said it too would support the government’s bid to seize land as long as it received “reasonable compensation” and provided the land in question was not earmarked for “private housing or commercial development purposes”.
“Of the lots in the New Territories that the government said it will resume, [we] may have a small area but [are] waiting for the government’s release of the resumption plan for verification,” it added.
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“With the endorsement of key developers – meaning they would not take legal action against the government in using the ordinance – it will remove one of the biggest hurdles for the government to take back land,” said Kevin Tsui, an associate professor at the College of Business at Clemson University in the US, who spends half his year in Hong Kong.
Henderson, founded by Hong Kong’s nonagenarian tycoon Lee Shau-kee, is one of the city’s largest private landowners. The company said it would not object if three or four of its land plots totalling 1 million square feet located in Fanling near Hong Kong’s border with Shenzhen – already zoned for public housing – were requisitioned.
Henderson, with 45.9 million sq ft of rural land, is the biggest holder of farmland in Hong Kong.
The land earmarked in today’s announcement – which includes nine graves covering an area of 752.8 square metres – is to be used for the construction of 21,000 units in the first phase of a new town in Kwu Tung and Fanling North. Eighty-six per cent, or 18,000, of the units will be for public housing and are expected to be ready for occupation in 2026, while 3,000 private flats will be completed as early as 2023, the Lands Department said.
The whole area will provide a total 71,800 units when fully developed.
A spokeswoman for Henderson said the firm had not yet received any notice of seizure of its land but would “accept a compensation offer from the government.”
According to the ordinance, the rate for “category A” agricultural land – within planned new towns or affected by major projects of “territory-wide significance” – is currently HK$1,348.80 (US$172.47) per square foot.
If Henderson’s land falls into this category, the government will have to fork out HK$1.3 billion to reclaim it.
Just hours after the announcement of the land resumption, the Hong Kong government unveiled its quarterly land-sale programme for the coming three months. It plans to release two plots, in Tuen Mun and Tai Hang, for tender between October and December.
The two plots can yield 980 units, according to the Development Bureau, the lowest number since the quarter ended June, 2018, down 27 per cent from the 1,350 units in the previous three-month period.
Together with land provided by MTR’s Lohas Park and other sources, it brings the total capacity of land sold this year to 9,230 units, just over two thirds of the targeted 13,500 units for the whole year.
On Wednesday, New World Development announced it will donate land for Hong Kong’s government and various non-profit organisations to build public homes. Light Be, a non-profit developer, will get the first 28,000 sq ft of land in three plots on which to build 100 homes each measuring 300 sq ft, out of a total of 1 million sq ft. All in, New World said it would give away 3 million sq ft of land – in separate parcels – equivalent to 28 hectares.
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Development secretary Wong welcomed any altruistic gesture from the city’s developers but said it might not make a huge difference.
“When we look at the charitable acts of individual developers – whether they are prepared to donate land, or rent out land on a long-term basis, on a non-market basis, to non-governmental organisations for various charitable purposes including transitional housing – we will say it’s a good thing,” said Wong.
“Given the scale and size of land that we will need to come up with in the future, I don’t think that any charitable donation by individual developers would actually take up a huge percentage of that demand.”
Henderson’s offer is better than New World’s donation, according to Avis Mak, head of investment advisory at brokerage Shenwan Hongyuan.
“New World still has to explain to shareholders how the donation can enhance their interests. The market worries that New World’s unconditional donation may harm shareholder interests,” said Mak. “In contrast, Henderson’s way considered shareholder interests. Considering the government’s compensation proposal of HK$1,124 per sq ft, Henderson can get revenue of HK$1.12 billion.”
Mak added that Henderson’s offer could avoid compulsory resumption and speed up the infrastructural development of the farmland, increasing its value.
Last week Sun Hung Kai Properties, Hong Kong’s largest developer by value, said it has between five and seven plots of land in areas already zoned for public housing in Hung Shui Kiu and in the northern New Territories that can be turned over to the government.
Beijing has singled out the housing crisis as a “root cause” of young people taking to the streets in recent months to protest against the Hong Kong government.
In 2013, the government scaled down its initial land resumption proposal for the planned new town in Kwu Tung and Fanling North, after developers threatened a judicial challenge.
