Decision not to sell site at The Peak reflects best use of land resources

The Hong Kong government was bound to be accused by some of being two-faced about its housing policy after withdrawing from sale a plot of land on The Peak that failed to meet price expectations. The market had anticipated the site would fetch a record HK$48.5 billion or HK$120,000 per square foot, but none of the five tenders the Lands Department received met the reserve price. This was not a case of greed or evidence that policies are contributing to unaffordable housing costs, though; there was nothing run-of-the-mill about the land, in one of the city’s most prestigious districts. More, the failure to lock in a sale could be better seen as a sign that the red-hot property market is cooling.

Chief Executive Carrie Lam Cheng Yuet-ngor said the day after the move that it showed the government did not have “a high price policy”, although it would also “not sell our land cheaply”. Some may see such a comment as an oxymoron, but it is a reflection of a policy centred on ensuring the best use of land resources and safeguarding the public interest. With the proceeds of land sales making up a significant proportion of government revenue, the reserve prices are set by professional surveyors who take into account the latest market trends.

The Peak is mentioned in the blockbuster movie Crazy Rich Asians for good reason: it is the home of many of the wealthiest in Hong Kong, among them billionaires, business magnates and celebrities. Under a government policy to dispose of underutilised property, authorities decided to sell the site on Mansfield Road featuring six blocks of government quarters that housed top officials and judges. Land in the district is obviously prized, a reality reflected in ever-heightening prices for flats and houses. With the government not having sold a plot in the area for eight years, the sale was seen as one that would set a new price benchmark.

No point of reference has been set; market sentiment and higher interest rates were perhaps not adequately taken into account. But that does not mean the government should have sold the parcel of land for less than its reserve price. The Peak is a luxury residential neighbourhood and does not factor into any discussion regarding the shortage of land for private and public housing. Nor is there a rush to boost government revenue, so the Lands Department can bide its time on the sale.

The government has a clearly stated housing strategy, which is to establish its role as a provider, build a housing ladder for Hongkongers, focus on the supply and optimisation of existing resources, and improve living conditions. Selling prime land on The Peak should not enter into the debate.