Courage and new mindset are needed to seek breakthroughs in land and housing policies which are a fixture in every yearʼs Policy Address.
Land lays the foundation for economic development, while housing determines people’s livelihood and public support. Land supply and housing are the most severe problems for Hong Kong. Due to its large population but limited land, Hong Kong has long been plagued by land shortages which have to be resolved urgently. Courage and new mindset are needed to seek breakthroughs in land and housing policies which are a fixture in every yearʼs Policy Address.
Housing is the foundation of people’s livelihood
With a per capita living area of about 161 square feet, the smallest in the world, Hong Kongʼs living environment is overcrowded. In recent years, “nano flats” have emerged due to high housing prices, with over 200,000 dwellers of sub-divided units living in an area of just 56.5 square feet per capita. The grassroots have to not only live in ever smaller homes, but also wait for increasingly longer time for public housing. Generally, the average waiting time for applicants has changed from the past target of three years to 5.6 years now. It is also not easy for the middle class as private property prices have long been disconnected from peopleʼs income. It is difficult for people to afford a home, let alone live in peace and work happily.
To address the grassroots housing problem, the Government announced in 2018 an adjustment to the ratio of public to private housing from 6:4 to 7:3. In terms of long-term supply, this year marks the first time that the Government has met its target since it formulated the Long-Term Housing Strategy, demonstrating its commitment in this regard. Around 330 hectares of land have been identified, which should be enough to build 316,000 public housing units, surpassing the target of building 301,000 units between 2021/22 and 2030/31. The results merit recognition, but most of the aforementioned come from new development areas and re-zoned land, so it is just interim results of past efforts to look for land, rather than additionally acquired new land.
Finding land is not easy, persistence is still needed
Looking ahead, the Government has to put the interim results of land acquisition to good use, and through the newly established Development Projects Facilitation Office and the expanded Steering Group on Streamlining Development Control, expedite re-zoning and approval of applications as well as set specific targets and efficiency timetables to turn “raw land” into “developed land” as soon as possible. In addition, there is still room for the Land Reclamation Ordinance to harness the New Territories’ brownfields and private lands without development plans. The Government should not give up even if it faces numerous difficulties and has to spend a lot of time. It should keep accumulating land to meet people’s needs and provide a rung on the ladder of home ownership.
With regard to short-term supply, the aforementioned 330 hectares of land cannot meet the urgent needs before us, and the Government has also acknowledged that it will take five years before there is any big improvement in the waiting time for public housing. To meet the urgent needs, out-of-the-box discussion with the hotel industry to increase transitional housing supply is a win-win situation amid the COVID-19 outbreak. As for cash allowance for applicants who have been waiting for public housing for over three years, it should be implemented earlier in the face of the economic downturn, rather than waiting until July 2021.
In addition, the Policy Address focused very little on private housing, and only included a study on the rent control of “sub-divided housing units”. The Government has failed to propose targeted measures to address the coming sharp decline in the number of completed private flats in the next five years, with an average annual supply of just 16,000 units. Although half of the Siu Ho Wan project will be designated as private housing, providing around 10,000 units, the supply and demand of private housing in Hong Kong will continue to be imbalanced in the short to medium term as the project will take about 15 to 20 years to roll out. Hopefully, the authorities will review the relevant policies for revitalizing industrial buildings, including studying the feasibility of converting them into private flats, and encourage owners to apply for conversion of industrial buildings to residential uses to meet people’s housing needs.
Development is based on land supply
According to estimates, Hong Kong’s population will show a downward trend after reaching a peak in 2041. However, with the rising number of households, an ageing population and ageing buildings, sufficient land will still be needed to support the growing need for living space, social services for the elderly and resettlement space. Moreover, apart from residential uses, the inadequate supply of land has become the biggest bottleneck to Hong Kong’s continued economic growth, which not only drives up rental and business costs, but is also detrimental to attracting overseas businesses and talents, thus severely weakening Hong Kong’s overall competitiveness. Due to the COVID-19 outbreak, the vacancy rate of Grade A office buildings in Central has risen to a 15-year high of 6.8%, with unoccupied shop spaces emerging in various districts. The Government’s abolition of the double ad valorem stamp duty on non-residential properties will help revitalise shop supply and facilitate businesses to raise money to cope with financial problems arising from the economic downturn, thus mitigating the impact of COVID-19 on Hong Kong’s economy and business activities.
Despite rising vacancy rates, the rental of office buildings in Central remains consistently the highest in the world, and Hong Kong also ranks as the most expensive city in the world for expatriates to live in. As land constrains the development of various industries and hinders economic diversification, the Government must respond to the needs of economic development and formulate plans for Hong Kong’s medium- and long-term land use as soon as possible, and put supporting transportation infrastructure in place.
Lantau Tomorrow Vision has strategic significance
The “Lantau Tomorrow Vision”, launched in 2018, not only addresses Hong Kong’s chronic land shortage, but also provides a sound basis for the future development of the Guangdong-Hong Kong-Macao Greater Bay Area. As a potential third core business district and offering 400,000 residential units at a public-private ratio of 7:3, the Lantau Tomorrow Vision has strategic significance in rationalizing economic, social and livelihood development. In early December 2020, the Finance Committee of the Legislative Council approved a HKD550 million funding request to conduct studies on the artificial islands in the Central Waters, including those on the engineering, financial plan and environmental impact assessment of the Lantau Tomorrow Vision’s first phase of constructing artificial islands in the waters around Kau Yi Chau, together with a transport infrastructure study. It can be said that it has finally taken the first step. Hopefully, the three-and-a-half-year study can provide an objective and scientific basis for whether to proceed with the Lantau Tomorrow Vision, and in terms of financing, the specific model of public-private cooperation can safeguard public interest.
Land reclamation is also a strategic policy for economic upgrading and transformation in Singapore, Shenzhen and Macao. To shake off the cyclical economic effects, the Government must plan ahead, continuing to create land to ensure land supply, thus laying the foundation for Hong Kong’s future economic diversification.
This is a free translation. For the exact meaning of the article, please refer to the Chinese version.
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