Hong Kong welfare chief says plan to buy private properties will not raise real estate prices

Hong Kong’s welfare chief said on Thursday that the proposal to buy private properties for use as social care facilities would have little impact on the real estate market because the units in question constituted only 0.1 per cent of the overall stock. Secretary for Labour and Welfare Law Chi-kwong also played down claims of possible collusion when the city would buy the properties. Law was responding to a range of concerns about a bold plan announced by Financial Secretary Paul Chan Mo-po on Wednesday as part of Hong Kong’s 2019-20 budget. Chan proposed spending HK$20 billion on 60 private units to convert them into 130 welfare facilities, including centres for childcare, the elderly and people with disabilities. The measure was expected to benefit about 86,000 people. Law dismissed concerns over a possible uptick in private property prices. He said the plan would be carried out over three years and spread over 18 districts. “The overall area is close to 40,000 square metres and is only 0.1 per cent of the overall stock,” he said. “We believe the impact is very small but we will pay close attention to the market changes so as to reduce the impact of the government proposal on the market,” he said. Paul Chan defends budget amid housing and health care concerns He said that the government would consider buying suitable office buildings and revitalised industrial buildings in addition to commercial buildings and shopping arcades. The welfare secretary explained that while it would be ideal to integrate some of these facilities, such as putting elderly activity centres with childcare centres, it depended on the market. He said the goal was to create 130 social care facilities in total. “We have full confidence when we are acquiring these units from the private sector.” Secretary for Labour and Welfare Law Chi-kwong Law dismissed critics who claimed the proposal could result in collusion. He said that a working group would be set up to study potential purchases, and that the Independent Commission Against Corruption (ICAC), the city’s corruption watchdog, would be consulted on the use of public funds. “We have rules and procurement policies governed by our Financial Services and the Treasury Bureau and ICAC … our procurement policies also have to be consistent with the World Trade Organisation requirements,” he said. “We have full confidence when we are acquiring these units from the private sector.” Law noted the government currently possessed similar properties, including the Social Welfare Department’s headquarters in Wu Chung House in Wan Chai. Budget measures to address ‘pain points’ in society fail to please all In 1995, the government applied to the Legislative Council’s Finance Committee for HK$2.5 billion to buy 86 venues for welfare facilities for children and the elderly. Lawmakers across the board expressed reservations about the initiative in a two-hour meeting with Chan. NeoDemocrat lawmaker Gary Fan Kwok-wai said it would cost up to HK$300 million in taxpayers’ money for each property, and that the buildings were likely to be underused shopping centres. “The government has sold shopping malls to the Link Reit before, which failed to provide sufficient welfare services for the public,” he said. “And now the government is using a sky-high price to purchase the malls from the property investors again. What is this if it is not collusion?” Fan was referring to the real estate investment trust that took over shopping centres and wet markets from the Housing Authority in 2005. Link Reit, a listed company, had been criticised for giving tenants a hard time by raising rents. But Law said that “the possibility of buying properties from the Link Reit is close to zero”. He explained that with a lot of welfare facilities being in public housing estates, the need was not so high. Even so, he would not rule that out completely. He said the focus of the initiative was on areas that had the most need for social care centres. Six key takeaways from the 2019 Hong Kong budget A spokesman for Link Reit said it welcomed the community measures proposed in the budget, but had no comment on its initiative of purchasing properties for welfare uses. Several lawmakers had recommended that vacant schools be converted to welfare facilities. Law responded that the city was doing all it could to find land for the facilities, including renting, buying, and building. Law said the project could start at the end of the year or in early 2020, depending on outcome of the budget approval process in May, and when the plan could be brought to the Finance Committee for discussions. He said that he would brief the Legislative Council on the plan, including an assessment of the priorities in the 18 districts.