Building more flats in Hong Kong is easy. The hard part is doing it with vision

Richard Wong says the menu of options proposed by the government’s task force to solve our housing crisis is missing an overall strategy for the city’s future development. Taking that into account, we should focus on Lantau and New Territories development

PUBLISHED : Tuesday, 26 June, 2018, 12:03pm
UPDATED : Tuesday, 26 June, 2018, 10:29pm

The Task Force on Land Supply published its much-awaited report in April, and is now gathering public views on a menu list of land supply options. The report was disappointing on three counts.

First, it did not outline a strategy for Hong Kong’s future development. The report appeared to be content with citing a projected shortfall of 1,200 hectares of land based on the Hong Kong 2030 Plus planning study. It provided little enlightenment on objectives, trade-offs and the way forward.

Second, although reference was made to the “tiny” and “cramped” living conditions in domestic premises, it offered nothing in terms of improving the per capita living space in the construction of future units as a development goal.

Third, the report identifies 12 land supply options other than regular ongoing activities, but says nothing about ameliorating the factors that delay development.

Developing land takes time because there are many regulatory approval processes to be followed. Given the huge shortfall of land supply, the government should have been innovative in finding ways to speed up these processes so more land could be made ready sooner.

The absence of an articulated development strategy means public engagement on the issue is subject to unabashedly partisan expressions of views. How can we decide the common good on an issue of such paramount importance to Hong Kong’s future?

The severe shortage of land is affecting the cost not only of residential space but economic space, too – illustrated by landlords selling commercial buildings in Central at HK$40,000 per square foot.

Watch: Why is Hong Kong housing so expensive?

Finding land for development is central to the long-term economic future of our society – for attracting business within the “Belt and Road Initiative” and the Greater Bay Area development plan, and for determining whether our prosperity will be lopsided, benefiting only the few, or broadly based for the benefit of all.

We need to consider not only how much land should be supplied, but also where it is located, to meet residential and economic development needs.

Help decide the city’s future from comfort of your own home

Future economic activities need to have convenient access to the vibrant core urban area. Hong Kong Island and Kowloon are mostly fully developed and the transport system that serves them is at capacity. A more viable option would be to reclaim a sizeable island to the east of Lantau Island, with new connecting transportation infrastructure to the core area and the wider Greater Bay Area.

Develop Lantau, but with greatest of care

Another option would be to convert suitable agricultural land held by developers and indigenous landlords for housing development. There are at least 1,000 hectares, some of it brownfield sites being used for container storage and the recycling industries, among other purposes.

These activities would need to be relocated. A logical solution is to redevelop the River Trade Terminal site and its surroundings, which are in a primarily compatible-use industrial area. Although this would take time and be costly, few alternatives could trigger the quick conversion and release of many tracts of agricultural land.

The land conversion itself will also require time and entail high transaction costs. There has been considerable debate over whether land conversion should be approached through a public-private partnership or by public resumption. There are several things to consider here.

Why Hong Kong’s land supply consultation is just a charade

With a public-private partnership, transparency and a rules-based approach are always desirable, but not always easy to uphold. Each plot can differ from the next and assembling different plots into a bundled tract of land can take time because of the need to reach a consensus. This process can be slow when there is a greater concern about fairness and less willingness to trade this off with the need to get things done quickly.

Watch: Can public-private partnerships work to ease housing crunch?

Public resumption of land is often assumed to lead to faster development, but there can be unanticipated difficulties due to initial fragmented ownership – a common phenomenon in the New Territories.

Even using public resumption to develop only small tracts of land into public housing is difficult because it could lead to less efficient land use and a lack of coordination of overall development. What happens if a specific plot ends up as a private development?

Compensation key to land resumption

These factors affect compensation negotiations with landlords and tenants, whether acquired land is left undeveloped, and whether land resumption can succeed.

Given all these factors, the preferred policy approach in dealing with each tract of land should be whichever one could result in the speediest land conversion.

A negotiated outcome is also always desirable because it upholds the principle of fair compensation for the legitimate development rights of owners of private property – a right recognised by the Basic Law and by our courts.

The government should articulate a vision of future development that meets public expectations for a better living environment and a more prosperous economy. Reclaiming land to the east of Lantau Island would support Hong Kong’s residential and economic needs, and be consistent with a larger role in the belt and road and Greater Bay Area initiatives.

The government should also re-envision a more holistic development of the New Territories through the conversion of agricultural land. Speeding this up would be consistent with overall development aims. Far too much is at stake now to be diverted from the task by political and ideological considerations.

Richard Wong is professor of economics and Philip Wong Kennedy Wong Professor in political economy at the School of Economics and Finance at the University of Hong Kong