image

Hong Kong MTR

Don’t give rail giant MTR Corp property development rights at new stations, former Hong Kong housing chief urges government

Anthony Cheung, who spoke of his troubles trying to meet public housing targets, says contracts to build flats over stations should be open for tender

PUBLISHED : Tuesday, 10 July, 2018, 8:00am
UPDATED : Tuesday, 10 July, 2018, 9:38am

Hong Kong’s railway operator should no longer be granted property development rights atop its new stations as the model only benefits investors and not the public, the city’s ex-transport chief says.

Former transport and housing minister Anthony Cheung Bing-leung also told the Post in a wide-ranging interview of his struggles trying to meet public housing targets.

Cheung, who left the government last year, described sites above MTR stations as “valuable” because they are at convenient locations.

Why high-speed rail link fiasco almost caused Cheung to quit – twice

“To be fair, they should be open for tender, the government should not favour one company only, unless the company always thinks of the public interest,” Cheung said, referring to the MTR Corporation.

But as a listed company responsible to shareholders, he added, the rail giant was unable to do so.

Cheung raised the idea in a book documenting controversial incidents that transpired during his tenure as secretary for transport and housing from 2012 to 2017. He also noted how he had missed the target set for public housing supply and offered a defence of the city’s long-term strategy on the issue as laid down by the previous administration.

Hong Kong’s chief follows Singapore’s lead on housing – will it work?

In his Chinese-language book, whose title translates as “The inevitable reality: A review on housing policies in my five-year tenure as secretary”, Cheung highlighted that under the financing model, the government compensated MTR Corp with property development rights on top of a new station if a railway project was not deemed commercially viable.

Yet the calculation of the land premium assumed the site was greenfield – previously undeveloped for commercial purposes – and did not take into account the profits that could be generated from selling the new flats. This formula allows the railway firm to maximise its profits.

Land supply report to be driven by public views, task force chief says

“If the MTR is given an exclusive right to build on top of the stations, it will definitely build private flats … It’s feasible for the government to request it to build public flats, but I know the MTR must be very reluctant to do that,” Cheung said.

If MTR is given an exclusive right to build on top of the stations, it will definitely build private flats
Anthony Cheung, ex-transport and housing minister

Asked whether as minister he had raised with the operator the possibility of building public housing atop stations, he declined to say.

Cheung said officials could provide funding instead of development rights.

Despite its large stake in the company – more than 75 per cent of the corporation’s shares – the government could not vote in shareholders’ meetings if it was seen as a beneficiary of a topic under discussion, he added.

“The government is the major shareholder, but it’s also an investor, a regulator and a business partner,” he said of its relationship with the railway giant.

Plan to tackle housing crisis puts brakes on property transactions

This was why it had been difficult for officials to bring about significant change to the MTR fare adjustment mechanism.

Cheung, who returned to academia after government and is research chair professor at the Education University, claimed during his tenure as minister he always reminded the MTR Corp board “not to forget” the firm’s origins.

“It was started to serve the public,” he said, adding that the corporation did not have to face major investment risks in its expansion because the government would fill its funding gap “by granting it property development rights”.

Cheung also shared insights as to how he had missed the city’s public housing supply target.

He said he had suggested that more land designated for private flats could be reallocated for building public flats. Such a measure was announced last month by Chief Executive Carrie Lam Cheng Yuet-ngor.

MTR has ‘social responsibility’ to build public housing above stations

“Eighty per cent of the land given for public housing was not ready for construction, which means the Housing Authority would need time to prepare, such as holding public consultations and applying for rezoning of the land use,” he added, noting these processes were contentious.

“On the other hand, land sold to developers is ready for building homes immediately.”

Cheung noted two bureaus are tasked with meeting the city’s housing targets: transport and housing for the public allocation, and development for the private market.

“After all, they are two bureaus, [they have] two KPI [to achieve],” he said, referring to key performance indicator, a measurement that evaluates an organisation’s success at a particular activity.

The Development Bureau attained its target of selling land for building at least 18,000 to 19,000 private flats over the past four years. But the Transport and Housing Bureau came up short. When Cheung finished his term in 2017, it was estimated the supply of public flats by 2027 would reach 236,000 – 44,000 units short of the target of 280,000.

“It is not reasonable for only one bureau to have achieved the target,” he said. “It exposed the fact that there was not enough land for building public flats.”

Public opposition at the district level proved another factor complicating the land search process, Cheung wrote in the book.

If people are confident that there will be an adequate supply of housing down the road, he said, they “won’t be impatient and rush” to buy a flat. This, he added, was the point of having a long-term strategy.

Cheung noted the previous administration had also considered imposing a vacancy tax, a move now proposed by Lam to discourage owners from hoarding unused flats. It had also thought about building homes on private agricultural land. But the proposals were put aside because the vacancy rate was low and there was no way officials could avoid the perception of collusion with private developers.

We won’t be a property developer: MTR Corp on surging portfolio

Yet he believed the city should gradually boost home ownership and increase the supply of public housing, although it might take more than 30 years to reach Singapore’s level, where 80 per cent of the people live in public flats. In Hong Kong, about 46 per cent of residents lives in public housing.

“Hongkongers oppose reclamation,” he said. “How can we follow Singapore?

“We need more public housing. Then people can live in a flat bigger than subdivided units … Society should focus on increasing the supply of public housing, despite all the difficulties.”

An MTR spokesman said the financing model of granting the corporation property development rights had proved to be a sustainable business model and it required no government subsidies.

It also created integrated and quality communities for the Hong Kong public by providing seamless connections between railway services and facilities atop stations and depots, he added.

The corporation would continue to work with the government to look at the best way forward to support future railway projects, he said.