Hong Kong’s property problem ‘entirely solvable’

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A huge opportunity has been given to the HK govt, says Ronnie

RONNIE CHAN Chi-chung was being lectured by a taxi driver. “There is not enough land in Hong Kong,” the cabby said, happy to have a chance to shares his views on property with a well-known real estate developer. “And it’s all because of the government.”

Chan got exactly the same message from a friend he was visiting. “It’s because of the government that we don’t have enough land,” said his host, the president of one of the city’s universities.

Perhaps they were being nice, moving the blame away from developers like him.

But Chan knew the conventional wisdom was wrong.

Not enough land? Just seven per cent of Hong Kong’s land mass was taken up with apartments. There’s plenty of land.

Hong Kong is mostly undeveloped green space

And it wasn’t the government, who had been actively trying to solve the problem for years.

He took time to go through the records. His research reminded him that in 1997, the government not only introduced a policy to build 85,000 apartments a year, but found enough land to erect that number of flats annually for five years in a row.

Other than the sudden interruption of the Asian financial slump and a six-year period without land sales, he discovered that for most of the 24 years of “Hong Kong people ruling Hong Kong”, the government had regularly attempted to boost land supply, to alleviate the shortage of flats all round and lower prices.

Why had they failed so spectacularly?

ONE-WORD ANSWER

Chan had a one-word answer to that question, expressed loudly at Friday group’s May 31 conference: “Politicians.”

The developer shakes his head. “They [the government] wanted to sell land but they were unable to because they were stopped by Legco [the Legislative Council]. And then they [the politicians] turn around and blame the government,” he said. This was nothing more than “trickery”.

In defence of politicians, sometimes they did have other reasons for fighting against land projects, but there’s plenty of evidence that Chan’s central conjecture is true:  politicized battles often halted attempts to solve the housing problem. While there is some large scale development taking place in “brownfield” sites, significantly more land, including small pieces of land in some green zones, would need to be sacrificed.

Hong Kong appears to have jam-packed residential areas: Picture by Ken Chung/ Pexels

Today things have changed, and the new power structure is good news for Hong Kong, he believes.

Since the opposition party has resigned en masse, the government can finally tackle Hong Kong’s problems, Chan said.

“Now is the time for the Hong Kong government to – if you’ll pardon my language – get off its butt and get the land going.”

Chan is convinced that Hong Kong’s real estate problem is entirely solvable. He’s even done the math.

Step one: “Take two per cent of the country park,” he says.

Controversial? He thinks it needn’t be if you make it clear that you are a) solving the community’s biggest problem and b) limiting it to two per cent.

“Right now, 42% of Hong Kong’s land mass is public country park. Take two percent out, one percent for infrastructure, one per cent for residential building,” he says, his enthusiasm evident.

Tai Tam Country Park, one of many parks that add up to 42% of Hong Kong’s land mass. Picture by Friday staff

Next, you add a huge batch of new apartments to the market.

“Right now, only seven percent of Hong Kong’s land mass is residential. So if you add one per cent to it, that is 15% to 17% more land entering the market within the next three to five years.”

The result will be a huge jump in the number of available apartments, and solid downward pressure on over-priced property. Most people will benefit, albeit at the expense of landlords and speculators.

All along, the living space issue “was a political problem, not an economic problem”, he says.

Chan’s views are considered controversial by some. Yet the fact that the civil service and the engineers and the urban planners have a period of freedom to do something without political hindrance is interesting to consider. If they fail to improve the situation, they’ll have no one to blame.

Yet looking at the way Hong Kong people are returning to the property market, many people share Chan’s upbeat view.

* * *

Ronnie Chan was speaking at Friday Culture’s first forum, on May 31, 2021

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