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Launched in 2014, the land exchange arrangement in the New Development Area is currently only applicable to Kwu Tung North and Fanling North. Photo: May Tse

Hong Kong development chief dismisses collusion concerns as authorities plan to extend land exchange scheme to private sector

  • ‘I hope society can understand that private participation in land development does not imply collusion,’ Secretary for Development Bernadette Linn says
  • Government will still reclaim land and provide compensation if response from private sector is lukewarm, Linn insists

Hong Kong’s development minister has dismissed fears over potential collusion with developers as authorities plan to extend a land exchange arrangement to all new towns in the Northern Metropolis mega project to the private sector.

Secretary for Development Bernadette Linn Hon-ho on Sunday pledged to announce more details on the proposed change, where authorities would allow land owners to keep their plots in the new towns, build developments in line with zoning uses and pay for increased land value through premiums.

But Linn emphasised the government could still reclaim the land and provide compensation if the response from the private sector was lukewarm.

Secretary for Development Bernadette Linn has pledged to announce more details related to the mechanism. Photo: Edmond So

“I hope society can understand that private participation in land development does not imply collusion,” she told a radio programme.

“Things that are being done for development are in line with what society wants, and private developers must pay the land premium. Therefore, I believe that everything is being done under the sunlight.”

She said the government could get a boost from the land premium income and the mechanism would also help speed up development.

The land exchange arrangement in the New Development Area, launched in 2014, is only applicable in Kwu Tung North and Fanling North at present.

The first phase was completed in 2017 and saw the approval of two applications.

Hong Kong to help finance Northern Metropolis project with land exchange scheme

About 20 applications were received for the second phase, which began last year and is scheduled to finish by the end of next month.

Linn said seven of the 20 met the government’s requirements, with six of them at present in discussions in connection with the land premium. She added the seven sites could yield 9,000 flats if developed.

Linn said the government would still reclaim the sites and provide compensation to owners where a consensus could not be reached on the land prices.

With plans to extend the land exchange arrangement to all new towns as proposed in the government’s second policy address last month, the administration also suggested expanding the designated zoning use beyond residential and commercial purposes to include welfare and industrial uses, such as logistics.

The Kwu Tung North area in North New Territories, which is covered under the land exchange arrangement. Photo: Winson Wong

But Linn said the arrangement would not be applied to land parcels in San Tin that were earmarked for the innovation and technology industry as the government had its own plans and targets.

She added the government would also offer help to major land owners who had at least 90 per cent of a site and had difficulties in gaining ownership of the rest and that authorities would provide compensation and take back the remaining 10 per cent of the land and pass it to the private sector for development.

About 30,000 hectares (74,132 acres) of land located in the Northern parts of the New Territories along the city’s border with mainland China will become an economic powerhouse and a residential hub in the next 20 years under the Northern Metropolis plan.

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The megaproject will create more than 500,000 new homes on top of the presently planned 400,000 flats - 900,000 flats altogether, able to accommodate 2.5 million people.

Authorities aim to lay out development plans for all the new towns by 2024 and start land reclamation work for all major developments by 2027.

It is hoped to complete the construction of 40 per cent of the flats by 2032.

Linn added that the government would not slow down its progress in creating land supply, despite a number of land tender withdrawals and an economic slowdown.

“We can imagine the recent land tender withdrawal cases are related to the weak local and international economy,” she said. “We will not modify the land use due to land withdrawal. Or else, it will affect our land deployment.”

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She added that land bids could succeed when the government sold the land after a few months, based on past experience, depending on market conditions and whether bidding terms were modified.

The government recorded two land tender withdrawal cases in the 2023-24 financial year. It has only sold two residential plots over the past seven months.

Rail operator the MTR Corporation earlier this month also failed to attract any interest from developers for the joint development of a large-scale mixed-use property project in Tung Chung.

The city also had three other tender cancellations between January and March, on land offered by the government, the MTR Corp and the Urban Renewal Authority.