Officials should keep close eye on Link Reit
The sale of shopping centres in public housing estates by the real estate investment trust is a commercial decision, yet the company should not be allowed to shun its social responsibility
Legitimate business ventures in a free economy generally do not warrant government intervention, except when public interest may be compromised. But as far as the controversial sale of 17 shopping centres by the Link Reit is concerned, there is every reason to be concerned. It is imperative for officials to closely monitor the ensuing development and ensure that the interests of shop tenants and residents are not adversely affected.
Ever since the government hived off retail and parking facilities at public housing sites to the Link Reit in 2005, there have been fears that commercial interests would reign over the public good. The privatisation has pros and cons. It breathes new life into rundown facilities and makes shopping more pleasant. But as the malls move upscale, so too do the rents. A considerable number of retailers catering to low-income residents have been priced out over the past decade. The outsourcing of management of the facilities has also led to complaints and lawsuits, and prompted the previous administration to step in.
Over the past three years, the Link Reit has sold 28 other shopping centres for HK$12 billion. In what is the biggest sale of its kind, the real estate investment trust is now selling another 17 malls for HK$23 billion to a consortium that,includes a private equity fund and an investment bank. The buyer has yet to disclose its business plan. But if previous experience is any guide, the takeover does not bode well for low-end shops and non-government bodies running welfare and education services for residents in the neighbourhoods.
This is not to say that the decision to privatise assets in public housing estates was wrong. Given the Housing Authority is a public body with little business expertise, privatisation did make sense. The subsequent improvements in facilities and management prove that the private sector can do a better job in maximising business potential. But it also means higher prices for shoppers.
As a listed investment fund, the Link Reit is accountable to its shareholders. But weighing heavily on its shoulder is a wider sense of social responsibility. It is important that it continues to abide by the rules, such as providing rental discounts to NGOs and other bodies working for the public good.
The Link Reit has been described by Chief Executive Carrie Lam Cheng Yuet-ngor as one of “three mountains”to be tackled by the government. As Hong Kong’s leader, she must show unwavering resolve in addressing the concerns arising from the Link Reit’s operation. The government should closely monitor the situation and ensure that public interest is not compromised.