Estimated price tag for Hong Kong’s Northern Metropolis revealed as HK$224 billion – but expert expects final bill to be much heftier
- Development Bureau tells lawmakers more accurate estimates will only be available once studies and designs are at a more ‘mature stage’
- Veteran surveyor Lau Chun-kong says the government estimate is far from final and just a ‘small part of the total cost’
A massive Hong Kong development near the border with mainland China will cost at least HK$224 billion (US$28.7 billion) to build, authorities have revealed for the first time, but an expert expects that sum will only be a fraction of the final bill.
“We would only be able to provide more accurate estimates on the expenditure of those projects when the relevant studies or design proceed to a more mature stage,” the Development Bureau said in a reply to a lawmaker’s inquiry.
Veteran surveyor Lau Chun-kong, a former member of the government-appointed task force on land supply, said the estimate was far from final.
“The latest price tag of the project is believed to be a small part of the total cost as it is just the beginning of the land resumption,” he said.
So far, the government has rolled out plans for most of the new development areas under the blueprint. It aims to announce the rest, covering a proposed New Territories North New Town, Ngau Tam Mei and Ma Tso Lung, by the end of the year.
The bureau said expenditure and estimates on land resumption and work for the development would also depend on actual arrangements, such as whether there were successful in-situ land exchange applications, or if the administration would invite the private sector to undertake large-scale projects.
The land exchange scheme allows landowners at designated sites in new development areas to pay premiums to the government and develop those lots for specific uses indicated in the statutory zoning plan.
The administration earlier said the arrangement could alleviate government cash flow pressure.
The bureau said the megaproject had recorded three successful land exchange cases, in which a private residential project was completed in 2022, four years quicker than the first public housing project scheduled in the area. But it did not provide further details.
It added that the administration would explore introducing a large-scale land development approach by granting sizeable lots to developers through tenders to build projects with investment returns, community facilities and infrastructure.
Noting the approach could alleviate the government’s financial burden, coordinate design for the area and expedite the development by leveraging market forces, the bureau said it would consider factors including the property market situation and sell land in an orderly manner.
Of the HK$224.79 billion estimated cost, around HK$121.81 billion is reserved for land resumption and clearance in five of the 14 development areas in the project.
Development in Kwu Tung North and Fanling North takes up the most money with a price tag of HK$86.39 billion. Funding approval for planning and an engineering study was granted in 2008, the earliest among all projects.
Hung Shiu Kiu and Ha Tsuen projects come second at HK$60.2 billion. The least was Ma Tso Lung, with only one expenditure of HK$28.9 million on a feasibility study.
It is envisioned that under the Northern Metropolis an extra 500,000 flats will be built on top of the current 400,000 to house 2.5 million people in total. Half a million jobs are also expected to be created in new development areas.
The government aims to start taking back land for major projects before 2027, with plans to resume 700 hectares mostly in the Northern Metropolis in the coming five years and the remaining 200 hectares in the latter part of the decade.
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Surveyor Lau estimated that resuming the first 700 hectares would cost around HK$90 billion, but he said the sum had yet to include construction and infrastructure expenses which could be unpredictable given economic uncertainties and inflation.
But Lau said the land resumption cost would not pose much financial pressure on the government as the process took years and it only had to pay year by year.
Chan Kim-ching, founder of Liber Research Community, a local NGO focusing on land and development policy, said the government estimate was incomplete, as it should also include the expected costs of each piece of infrastructure and potential gains from the project.
“It would help to provide the full picture of the Northern Metropolis on its cost-performance ratio,” he said. “The government and society could hence have plans to expand or scale down the projects.”
Another proposed megaproject in Kau Yi Chau, which involves building three artificial islands off Lantau, was estimated to cost HK$580 billion with a financial return of HK$750 billion by land sales in 2022.
But the government in February announced a delay on reclamation for a few years given its financial situation and focus on the Northern Metropolis.
Other large-scale construction projects, such as the Hong Kong-Zhuhai-Macau Bridge and Guangzhou-Shenzhen-Hong Kong Express Rail Link, cost HK$120 billion and HK$84.4 billion respectively.
