Weekend Property

How to convert idle farmland and brownfield sites for housing development use in Hong Kong

Developers often complain that freeing up idle land is a lengthy process which involves clearing many hurdles, but understanding the government’s strategy may help

PUBLISHED : Friday, 15 September, 2017, 9:31am
UPDATED : Friday, 15 September, 2017, 11:03am

Serena Lau, managing director of property consultant RHL International, talks about the application and approval process – and the hurdles that must be cleared – to convert farmland.

What is the typical land-use conversion process in the non-New Town areas of the New Territories?

To convert a piece of land held under the Block Government Lease and restricted [for example] to agricultural use, the owner or developer has to apply to the Lands Department for an “in-situ land exchange”. Before formally accepting an application, the Lands Department will seek advice from the Planning Department and other departments with regards to land use zoning, development restrictions on the Outline Zoning Plan, and planning permissions granted by the Town Planning Board (TPB). If a land exchange application requires rezoning or planning permission, the Lands Department will consider the application only after the site concerned has been rezoned or planning permission has been obtained.

What are the challenges in freeing up idle farmland for housing development? Why do developers claim that the process is too lengthy and frustrating?

If the land exchange application requires rezoning or planning permission, the process is more complex and time consuming. Often, such agricultural sites are attached to a green belt or agricultural zone even if converted to a brownfield site. [Brownfield sites refer to deserted agricultural or rural land already occupied, legally or illegally, for uses such as recycling yards and open storage.] First, the applicant has to seek approval from the TPB after going through lengthy proposal amendment and public consultation processes in which other stakeholders – including various government departments and the public – are involved. From my observations, the success rate in getting TPB approval on the rezoning of piecemeal sites from agricultural use or even green belt into other uses is low. TPB may acknowledge brownfield use is not compatible with the environment. Meanwhile, the justification for converting a supposed green site for economic development must be strong enough to meet the environmental and technical criteria.

How should one go about clearing these hurdles?

Instead of leaving it to the land exchange applicant or developer to apply for land use rezoning, I think it’s more effective for the government to take the lead as a way to encourage conversion of idle farmland for other uses. It is noted that the government has formulated a more holistic land-planning strategy with the aim of clearing the hurdles around brownfield sites to facilitate future development in the New Territories. While challenges from different stakeholders may arise, consensus should eventually be reached with government facilitation before the landowner applies to convert the site for another use.Otherwise, the idle farmland (with or without legal or illegal conversion into a brownfield site) will probably be around for a long time because, from the owner’s point of view, it is not cost-effective, and it would be better left vacant or converted to a brownfield site yielding rental income. Therefore, the hurdles include not only the lengthy rezoning efforts, but also the time and effort required to get consensus from all concerned stakeholders and affected occupants, across the economic, political and environmental spectrum. On the broader land supply issue, I believe the new leadership will not only continue to find ways to free up idle agricultural sites, but will also consider reclaiming land, the development of the fringes of country parks, and even the sustainability of the controversial Small House Policy for long-term planning.

Why do developers say it’s difficult to reach an agreement with the government on the land premium to be paid for land-use conversion?

The Lands Department has a valuation mechanism to assess the value of the site under application and therefore the land premium to be paid. The valuation method is not open to the public, but is believed to be based on the market value of the development upon completion, with reference to the comparable properties transacted in the past. I think their calculation approach may have to be more forward looking. It’s fairer to place more weight on the economic and social uncertainties which will affect future land supply, interest rate expectations, vacancy situation, housing demand, etc., in order to factor in development risks.