Land Sharing Pilot Scheme could be a partial relief for the pressing housing shortage

    02/19/2020 - 09:00

    Authors: Ryan Ip, Head of Land and Housing Research, and Iris Poon, Researcher at Our Hong Kong Foundation.

    Hong Kong has headed into a frantic yet unusual start in 2020. We could only hope better things will come despite a clumsy beginning for our society as a whole. As we look back for 2019, the progress in land development had been sluggish, just as with any other things happening in the city.

    Land Sharing Pilot Scheme could be a partial relief for the pressing housing shortage

    Many plans were delayed or suspended in the past year. For instance, the funding approval for the studies on Lantau Tomorrow has yet to pass LegCo scrutiny. Among the five near-shore reclamation sites that were proposed earlier, Ma Liu Shui and southwest Tsing Yi were suspended. And there is not even a timetable for the development of caverns and underground space. It is not until November that the Government finally announced the details of its Land Sharing Pilot Scheme (“LSPS”), which was first proposed by the Chief Executive in her pollical platform back in 2017.

    The LSPS aims to expedite the progress in releasing the development potential for private land in the New Territories. It has three key components: 1) leveraging on market forces to build out infrastructure, with the ultimate goal to raise development density; 2) allocating 70% of the additional floor areas for public housing; 3) setting up an intra-departmental Central Team to coordinate the decision-making process .

    We have reiterated our warnings on the supply vacuum in both public and private housing in several years’ time. We forecast that in the next 3 years, applicants for public rental housing will on average wait for more than 6 years to get a flat.

    Striking a balance between comprehensive planning and housing supply

    To avoid falling into a limbo state in our urgent future, we need effective quick fixes. The LSPS could be regarded as a workable near-term solution. Undoubtedly, the existing town planning process could help us plan comprehensively. However, we should also keep in mind that at present Hong Kong has an acute shortage of residential land. The LSPS could strike a balance between the two.

    One of the biggest benefits from the LSPS is the relatively quick development process. As the Government is in a lack of land reserve, it mainly relies on rezoning as a main source of land supply. The problem of rezoning is that it takes time. We found that in 2018, among the lands that had altered their uses, the average time for going through the rezoning process was 5 years. Meanwhile, under the LSPS, it would take only 3 to 3.5 years. Taking into account the time needed for site formation, the LSPS should be able to produce spade-ready land within 4 to 6 years, thus increasing the land supply for public housing in the medium term.

    Government should extend the scope of the Central Team to other applications

    Under the LSPS, the Government will set up an inter-departmental Central Team to provide applicants with a one-stop consultation and facilitation service to support the handling of cases. We suggest the Government can expand the scope of the Central Team to also process other land development applications from private land owners.

    Meanwhile, we believe that the Government would receive multiple applications for the LSPS from the same district. We hope that the Central Team can coordinate the applications – for instance the additional road infrastructure and community facilities could be considered in a holistic way.

    However, the LSPS has certain controversial details. One of them is the requirement that the lease modification and premium negotiation must be completed within 18 months after the statutory planning procedures. This means that in the worst case, the applicant will have only two months to consider whether to accept a Government bid or file an appeal. We urge the Government to try and reduce the time required for the evaluation work, so as to give the applicant more time to consider while maintaining the total 18-month time horizon. At the same time, the Government may also need to review the current land premium evaluation mechanism according to the industry's recommendations.

    The need on upgrading transport infrastructure

    The LSPS could raise the development density mainly because it can help concentrate the whole region’s overall development potential into one single piece. Unfortunately, this measure is indeed draining the development potential from other lands in the same region.

    In the past few years, a lot of large public and private residential developments are completed in the New Territories. Despite this, both the roads and the railways in the entire area are already running near their capacities. The construction of additional major transportation infrastructure in the New Territories should be accelerated. These include the Northern Link, Tuen Mun South Extension, Route 11 and Tuen Mun West Bypass, to name a few. In the long run, we could only build more housing developments in the New Territories via upgrading the region’s overall transport capacity.

    Boosting land supply is a long journey

    While there are some inadequacies in the LSPS, hopefully it can help alleviate the housing shortage in the short-to-medium term. In the long run, however, the Government should speed up its progress in planning out the development of the New Territories, which is an inevitable step to help enhance the development potential of the district.