(This essay was published in the South China Morning Post on 27 June 2018.)
The Task Force on Land Supply published its much-awaited report in April, and is now gathering public views on a menu list of land supply options. The report was disappointing on three counts.
First, it did not outline a strategy for Hong Kong’s future development. The report appeared to be merely contented with citing a projected shortfall of 1,200 hectares of land based on the Hong Kong 2030+ planning study. It provided little enlightenment on objectives, trade-offs and the way forward.
Second, although reference was made to the “tiny” and “cramped” living conditions in domestic premises, it offered nothing in terms of improving the per capita living space in the construction of future units as a development goal.
Third, the report identifies twelve land supply options other than regular ongoing activities, but says nothing about ameliorating the factors that delay development.
Developing land takes time because there are many regulatory approval processes to be followed. Given the huge shortfall of land supply, we expected government to be innovative in finding ways to speed up these processes so more land could be made ready sooner.
The absence of an articulated development strategy means public engagement on the issue is subject to unabashedly partisan expressions of views. How can we decide the common good on an issue of such paramount importance to Hong Kong’s future?
The severe shortage of land is affecting the cost of not only residential space but economic space – illustrated by landlords selling commercial buildings in Central at $40,000 per square foot.
Finding land for development is central to the long-term economic future of our society – for attracting business within the Belt-and-Road and Big-Bay-Area context and for determining whether our prosperity will be lop-sided for the few or broadly-based for all.
We need to consider not only how much land should be supplied, but also the appropriate locations to meet residential and economic development needs.
Future economic activities need to have convenient access to the vibrant core urban area. Hong Kong Island and Kowloon are mostly fully developed and the transportation system that serves them is at capacity. A more viable option would be to reclaim a sizable island to the east of Lantau Island, with new connecting transportation infrastructure to the core area and the wider Big Bay Area.
Another option for new land would be to convert suitable agricultural land held by developers and indigenous landlords for housing development. There are at least 1000 hectares, some of it brownfield sites for such things as container storage and recycling industries.
These activities would need to be relocated. A logical solution is to redevelop the River Trade Terminal site and its surroundings, which are in a primarily compatible-use industrial area. Although this would take time and be costly, few alternatives could trigger the quick conversion and release of many tracts of agricultural land.
The land conversion itself will also require time and entail high transaction costs. There has been considerable debate over whether land conversion should be approached through a public-private partnership or by public resumption. There are several things to consider here.
With public-private partnership, transparency and a rule-based approach are always desirable, but not always easy to uphold. Each plot can differ from the next and assembling different plots into a bundled tract of land can take time because of the need to reach consensus. This process can be slowed when there is greater concern about fairness and less willingness to trade off with speediness.
Public resumption of land is often assumed to lead to faster development, but there can be unanticipated difficulties due to initial fragmented ownership—a common phenomenon in the New Territories.
Even using public resumption to develop only small tracts of land into public housing is difficult because it could lead to less efficient land use and a lack of coordination of overall development. What happens if a specific plot of resumption land ends as a private development?
These factors each impact on compensation negotiations with landlords and tenants, whether acquired land is left undeveloped, and whether land resumption can succeed.
Given all these factors, the preferred policy approach in dealing with each tract of land should be whichever one could result in the speediest land conversion.
A negotiated outcome is also always desirable because it upholds the principle of fair compensation for the legitimate development rights of owners of private property—a right recognized by the Basic Law and by our courts.
The government should articulate a vision of future development that meets public expectations for a better living environment and a more prosperous economy. Reclaiming land to the east of Lantau Island would support Hong Kong’s residential and economic needs and be consistent with a larger role in the Belt-and-Road and Big Bay Area initiatives.
The government should also re-envision a more holistic development of the New Territories through the conversion of agricultural land. Speeding this up would be consistent with overall development aims. Far too much is at stake now to be diverted from the task by political and ideological considerations.