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Hong Kong housing

Hong Kong doesn’t need a vast new town rising from the seas off Lantau

Tom Yam says the government’s vision for the East Lantau Metropolis rests on flimsy rationale, amid a lack of political will to secure targeted land elsewhere from vested interests

PUBLISHED : Tuesday, 01 November, 2016, 5:24pm
UPDATED : Tuesday, 01 November, 2016, 6:08pm

No sane investor commits to a project to be completed in 30 years with no data supporting the need for it, no estimate of the capital required, and no cost-benefit and risk analysis.

Unless it is the Hong Kong government, using taxpayer money, to build what it calls the “East Lantau Metropolis”.

This metropolis takes pride of place in the Development Bureau and Planning Department’s study, “Hong Kong 2030+: Towards a Planning Vision and Strategy Transcending 2030”, due to be presented to the Legislative Council’s development panel on November 8.

Hong Kong environmentalists unfurl protest banner on Kau Yi Chau against plan for ‘East Lantau Metropolis’

According to this “planning vision”, the East Lantau Metropolis will be created by reclaiming land around two islands east of Lantau and connecting them to Mui Wo in south Lantau. On these 1,000 hectares will rise housing for 400,000 to 700,000 people, and a business district, with essential infrastructure such as utilities, telecommunications, schools and clinics. Bridges or tunnels and railways totalling 29km will link this vast new town with the rest of Lantau, Hong Kong Island and Kowloon.

Clearly, the metropolis will be the most expensive infrastructure project in Hong Kong’s history, probably costing as much as the Hong Kong-Zhuhai-Macau Bridge, the high-speed railway to Guangzhou and the third runway combined. Yet the government has not explained why the project is necessary, other than the anodyne rationale of “strategic long-term growth”.

According to the government’s own figures on population and housing, this metropolis is bound to become the mother of all white elephants

Chief Executive Leung Chun-ying mooted the concept of the East Lantau Metropolis in his January 2014 policy address. Just three months later, his government requested HK$227 million for a feasibility study on reclaiming land for the metropolis. After barely 90 minutes of discussion at Legco’s development panel, the request was approved by 10-3 votes, thanks to pro-government legislators.

Since then, four requests to conduct an analysis of the need for such a metropolis in the context of population growth and housing supply have been rejected.

The Development Bureau now claims the East Lantau Metropolis is justified by its recently announced Hong Kong 2030+ study. Curiously, the study began in 2015, a year after funding was requested for the metropolis.

According to the government’s own figures on population and housing, this metropolis is bound to become the mother of all white elephants. The Census and Statistics Department projects Hong Kong’s population, now 7.3 million, to peak at 8.22 million in 2043, then fall to 7.81 million in 2064. The number of households, 2.43 million in 2014, is projected to peak at 2.93 million in 2044 and drop to 2.91 million in 2049. So, just as the East Lantau Metropolis is completed in the 2040s – adding capacity for up to 700,000 people and 260,000 housing units (at 2.7 occupants per household) – Hong Kong’s population and housing needs will be declining.

The fact is the government would achieve its housing targets without building a behemoth in the sea. It has targeted enough existing land for housing, but lacks the political will to secure that land from vested interests. Hong Kong has 2.67 million housing units now, and the government plans to add 460,000 new units in the next decade, for a total of 3.13 million units. This will meet the peak requirement of 2.93 million households in 2044, after which the number of households will decrease.

Four requests to conduct an analysis of the need for such a metropolis in the context of population growth and housing supply have been rejected

The Hong Kong 2030+ study acknowledges that with the East Lantau Metropolis, Hong Kong will have the capacity for 9 million-plus residents, whereas the population will peak at 8.22 million. It disingenuously suggests the extra capacity will mean more space for everyone. As many as 700,000 residents on the metropolis’ 1,000 hectares means a population density of 70,000 per sq km – far denser than Hong Kong’s most congested district, Kwun Tong, which now has 57,250 residents per sq km. Even at the lowest estimate of 400,000 residents, the metropolis will be 2½ times more congested than Wan Chai’s 15,000 residents per sq km.

One million people living in a Lantau metropolis: does Hong Kong really want this?

The 2030+ study offers another flimsy rationale: the extra capacity allows flexibility in case of an unforeseen 10 per cent rise in population (despite forecasts in the past 15 years predicting a declining trend).

That means the East Lantau Metropolis will be the costliest contingency plan in the world: hundreds of billions spent to provide for an unlikely 10 per cent increase in population. A smarter contingency plan would be to add capacity incrementally around planned development areas in the northern New Territories.

Like any sales pitch, “Hong Kong 2030+” brims with buzzwords – “smart liveable low-carbon”, “synergy effects”, “smart mobility-transport information platform”, and so on. But any serious investor subjecting the East Lantau Metropolis to even a rudimentary business case analysis would consign it to the recycling bin.

No wonder development chief Paul Chan Mo-po is trying to rush this immense project through with little public scrutiny. However, in May, he gave a private showing of a detailed model of the metropolis to Zhang Dejiang, China’s third-ranking state leader and top official in charge of Hong Kong affairs.

Showing Zhang the model, while hiding it from the public, makes it evident that the public consultation on “Hong Kong 2030+”, including the East Lantau Metropolis, is a pro forma exercise. The decision has been made, and public input will not change the outcome.

Tom Yam is a Hong Kong-based management consultant. He holds a doctorate in electrical engineering and an MBA from the Wharton School of the University of Pennsylvania