Hong Kong housing

Don’t blame developers for Hong Kong’s land ‘shortage’ – government policies are the real problem

Ian Brownlee says the government’s policy of buying back land in the New Territories, rather than allowing private owners to participate in the development of new towns, is contributing to the delay in freeing up land for housing

PUBLISHED : Tuesday, 27 March, 2018, 5:14pm
UPDATED : Tuesday, 27 March, 2018, 6:50pm

Developers are often criticised for hoarding land in the New Territories and not developing their plots to meet Hong Kong’s housing shortage. Nothing could be further from the truth. Developers want to develop; that is their reason for being. 

Instead, the biggest problem is that the government puts obstacles in the way of them doing this. Why this happens is mystifying to those of us involved in the development process, as it is the government that keeps saying land for development is desperately needed.

The private land in the New Territories is largely designated as agricultural land under the leases and zoned for non-development purposes – such as agriculture or open storage. Some of this land is privately owned by villagers, small businesses and families. Much of the land has been bought by developers as land banks for future projects. This is a reasonable strategy based on the historical approach taken by the government of rezoning land for development, then negotiating new leases with the existing land owner and requiring payment of substantial land premiums.

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In the past five years, I have made representations to the Town Planning Board on behalf of many land owners which would have produced more than 50,000 additional flats. These have been in reasonable locations with good access to public services and facilities, are compatible with the future planning of the area and meet policy objectives. Not one of these proposals has been accepted. Almost all proposals for new development on private land or for increased flat production on private land have been rejected.

It is almost as if a development possibility not initiated by the government is automatically rejected

The government has focused on rezoning government land for housing. As a result, many areas of the green belt, created to safeguard the natural environment from urban encroachment, have been rezoned. When private sector proposals are made on private land, they are inevitably rejected. It is almost as if a development possibility not initiated by the government is automatically rejected.

Where significant areas of private land have been rezoned by government for the new town development in Hung Shui Kiu, the government has put in place obstacles to the land exchange process which prevent owners from developing their land. Hung Shui Kiu covers 441 hectares, of which 324 hectares is private land. Within this are some 190 hectares of brownfield sites (damaged agricultural land), some of it used as container storage. Much of this land has been rezoned for housing, commercial development and community facilities. The Town Planning Board is yet to announce its decisions on public objections, many of which relate to private land ownership.

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In a Legislative Council paper in 2017, the administration adopted the “Enhanced Conventional New Town approach” stating that “the government will as a general rule resume and clear all of the private land planned for development and dispose of the land planned for private developments in the market”. Therefore, almost all of the private land owners will face compulsory purchase, lose their ownership rights and not be able to participate in the development of the new town.

The policy prohibits applications for land development zoned for logistics, industry, community and institutional facilities, and some residential developments. It puts in place unreasonable criteria regarding site size, configuration and timing, which effectively prevent current land owners from implementing the zoned development themselves.

One of the worst cases affected by this policy is a proposal from a reputable elderly housing operator that wants to develop an elderly complex on a private site specifically zoned for elderly housing. The government rejected the application because it was contrary to the Conventional New Town policy whereby elderly housing can only be provided by the government after it takes over the land and implements the project. The desperate need for elderly housing will be unnecessarily delayed for at least six years, whereas the private sector could provide it in half that time.

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This policy has enormous implications for the constitutional rights of private land ownership in Hong Kong. If the buying back of land is for a public purpose such as a school or public housing, it may be understandable. But if private land rights are being removed just so the government can sell the property to another private owner, then it could be legally challenged.

The policy also has enormous implications for public financing. Instead of negotiating a land premium and creating an income, the government will have to get funding approved for buying back land before any of this development can proceed.

Chief Executive Carrie Lam Cheng Yuet-ngor, in her policy address, accepted the need to work with the private sector to use their resources to help meet both private housing targets and part of the public sector housing production, such as Starter Homes. This approach is not supported by the current land policies in the New Territories. 

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An effective way of including private land owners in the development process must be identified so that good developments can proceed quickly. For some reason, there is no sense of urgency in unlocking the development potential of these enormous areas of existing private land. 

There is insufficient evidence to indicate that there is a real shortage of land. A sustainable development approach requires that institutional constraints to the wise use of existing land be critically assessed before accepting an irreversible impact on the sea and green areas.

Ian Brownlee is the managing director of planning consultancy Masterplan Limited and a member of the Citizens Task Force on Land Utilisation