image

Hong Kong housing

Hong Kong’s private sports clubs told to pay higher land costs reflecting market rates – but only from 2027

Twenty-seven facilities run by the clubs, including those for golf, cricket and boating, will have to stump up one-third of the site’s market value to renew their leases

PUBLISHED : Tuesday, 20 March, 2018, 6:42pm
UPDATED : Wednesday, 21 March, 2018, 11:48am

After years of cushy rental deals from the government, Hong Kong’s elite sports clubs operating 27 facilities will have to stump up one-third of the market value of each site to renew their leases – but this rule will only kick in from 2027.

This sum, to be paid every 15 years upon lease renewals, could amount to hundreds of millions of dollars under the proposed policy, the government said. Many clubs currently do not pay such a fee, and those that do pay a much smaller amount.

In announcing the landmark proposal on Tuesday, the Home Affairs Bureau said the lead time was necessary for affected clubs to adjust to the new rule. It said five leases would expire between 2020 and 2024, with most of the rest running out in 2026 or 2027.

‘HK$400 million rent exemption’ for 27 private Hong Kong sports clubs prompts call for lease review

Sites with leases expiring soon include the exclusive 170-hectare (420 acres) Fanling golf course run by the Hong Kong Golf Club and another plot run by the Aberdeen Boat Club.

Should operators of the five sites want to renew their leases, the bureau would assess their contribution to sports development in the city before agreeing, but it would not charge them the fee until 2027.

The Royal Hong Kong Yacht Club has three affected leases, and one of them expired in 2014, but the government said it would not consider renewal matters until Chief Executive Carrie Lam Cheng Yuet-ngor and her advisers made a final decision on the policy after a six-month public consultation.

The Hong Kong Jockey Club’s racecourses in Happy Valley and Sha Tin would not be affected by the proposal due to the group’s charitable work and low entrance fees, the government said.

The bureau’s Commissioner for Sports Yeung Tak-keung said: “We will continue to use private recreational land leases for those 27 sites, but their lease conditions will need to be revamped to suit the demands of both sports development and the need for better land utilisation.”

The proposal comes after years of public criticism about private club operators paying next to nothing to renew their leases and operating on below-market rents even though the city faces a housing shortage and skyrocketing property prices.

Critics pointed out that while the clubs were supposed to allow the public to use their facilities for a specified amount of time in exchange for favourable rental rates, most of the 27 sites were used exclusively by paying members from the city’s elite.

The lease clause HK’s top clubs would like to forget

The Audit Commission also ran a report in 2013 criticising the clubs for rarely opening their sports facilities for public use, adding that some conducted commercial activities there.

On Tuesday, figures from the bureau showed 18 private sports clubs were open to eligible groups for 19,000 hours a month, accounting for 13 per cent of their total operating hours.

Yeung said the 27 facilities would need to commit 30 per cent of their operating hours for eligible groups, as well as 240 hours of public activities a month instead of the current 50-hour requirement.

Without naming any clubs, Lands Department assistant director Tony Moyung Hon estimated that operators of some 100 hectares of land in the New Territories could be charged several hundreds of millions in land premiums.

For urban sites of between one to two hectares, he added, the one-off fee would amount to HK$100 million (US$12.7 million) to HK$200 million.

Yeung said the operators were being charged only a third of the sites’ market value as they contributed to sports development in the city. Some of the operators would not be able to afford the full amount, he added.

If any operators were not able to pay, Yeung said, they could apply to become “semi-public” organisations to enjoy further concessions, which meant their facilities would need to either be open to the public all the time or they would need to charge very low membership fees.

The South China Athletic Association, for example, charges members HK$120 a year, he said.

Partial development of Fanling golf course could provide housing quickly, task force says

Civic Party lawmaker Tanya Chan said the policy’s proposed implementation in 2027 was too long for the public to wait. She argued that it would not be difficult for some clubs charging high membership fees to pay the premiums.

She added that the government did not explain how it had decided on the one-third figure.

The lawmaker said the proposal seemed to avoid reviewing whether these private clubs should exist at all.

“Is it still fair when society has already been subsidising the rich for decades?” she asked.

Is it still fair when society has already been subsidising the rich for decades?
Tanya Chan, lawmaker

Secretary for Home Affairs Lau Kong-wah admitted that the government did not use any formula in deciding the fee. He said members of the public could give their opinion on the amount.

Lee Wing-tat, chairman of housing policy think tank Land Watch, believed the case for the Fanling golf course should be considered separately due to its size and housing potential.

He said the government, running on huge surpluses every year, did not need more money from land premiums and that authorities had to consider housing as the most important issue.

“There is not a lot of suitable space left in Hong Kong for housing, especially a large site such as the Fanling golf course,” Lee said.

The proposed policy change comes as a government-appointed task force studies options to increase land supply, including developing the Fanling golf course to build homes. An earlier study found that partial development of the site could yield 5,000 flats, or 13,000 flats if the entire course were used.

The golf course is leased to its operator until August 2020, which pays HK$2.53 million in rent a year.

There is not a lot of suitable space left in Hong Kong for housing, especially such a large site like the Fanling golf course
Lee Wing-tat, Land Watch

Asked if the government would indeed build homes on some of the sites, home affairs chief Lau said it would use the same benchmark to assess all sites, including whether the clubs were contributing to the city’s sports development.

In addition to the 27 privately run sites, another 39 sports and recreational facilities operated by NGOs, public sports clubs and religious groups will not be subject to the new rule as they come under a different type of lease.

Meanwhile, a spokesman for the Hong Kong Golf Club said it was dedicated to supporting the city’s golf development and nurturing young talent. He said the club’s Fanling course was “a key training ground” for them. The spokesman added that the club regularly opened its facilities to the public, with non-members accounting for 43 per cent of the total rounds of golf played on the Fanling course last year.

A Royal Hong Kong Yacht Club spokeswoman said it would study the proposal and the effect on its “key mission” of supporting water sports in the city.