_Government Action Required to Counter Looming Hong Kong Housing Shortage

The Hong Kong office market is very active, particularly in the Central CBD area, home to the financial industry, where rents remain high with robust demand. To increase the competitiveness of the city and maintain its position as an international financial center, it must enhance its commercial business districts and improve infrastructure.

In addition to office supply, land supply in the residential and logistics sectors is also seriously inadequate. It is estimated that housing supply in Hong Kong should be able to meet demand from 2018 to 2022, but supply of residential land after 2022 remains in question. In an effort to counter the coming shortages, the Hong Kong Government has set up a Land Supply Task Force to propose different opinions on and options for the land supply issues.

The problems of land and housing in Hong Kong have a long history, especially with regard to development of public housing. Further, insufficient housing supply in Hong Kong has driven private property prices to a level that is unaffordable to the general public – a problem that has exacerbated the public housing shortage.

Putting Feasible Options for Public Consultation

There have been many disputes and discussions on land issues in Hong Kong, but few land-based projects have actually eventuated. Therefore, it is imperative that the Government acts quickly to speed up the housing development process and meet the expectations of society. Thus far, the Land Supply Task Force has proposed a number of potential land options, and through extensive consultation, the advantages, disadvantages, and trade-offs of each option can be reviewed in order to reach a consensus society.

Among the various proposals, reclamation and artificial islands are considered more desirable and feasible options. The reclamation of non-natural coastlines outside Victoria Harbour and the construction of artificial islands in the central waters can reduce the compensation problem. These proposals will develop faster than those of other options, as they are simpler and more comprehensive for future new towns.

Public Private Partnerships a Potential Win-Win Solution

Public Private Partnerships (PPP) are another land supply model that can be considered. In the past, developers have had to hoard large amounts of agricultural land, involving lengthy urban planning procedures and high land premiums. Though public-private partnerships have great potential as a "win-win approach", such agreements would require government to establish an independent committee for approving PPP projects and adopt a scoring system based on certain criteria which are fair, justice and open, in order to remove the perception of collusion between government and developers. Under the public-private development model, the government could take direct responsibility for building infrastructure and increasing the plot ratio.

Brownfield Development a Complex but Feasible Option 

Brownfield sites are another land supply option to be considered, though such an approach would involve many stakeholders and associated land compensation issues. Indeed, most land in this category is currently rented out at low cost for warehousing purposes.

The allocation of private residential sites for new public housing will increase supply in the short term, but it will not solve the root causes of the shortage of public housing in Hong Kong. These lands are not "additional lands" unless the government holds other private land. It is estimated that while this new housing alone will not immediately adjust property prices or increase housing supply, land reclamation, building new towns, and public-private partnerships may be the way out.