Submission to the Task Force on Land Supply, 2018

1.         Introduction

1.1       This submission is made using our extensive experience in advising developers, green groups, sports organisations and community groups in providing space for their activities.  We have represented many organisations in the town planning process and we also assist with obtaining land allocations and lease modifications.

1.2       This submission is based on research we have carried out relevant to the issues being addressed and attendance at many forums and presentations.  Our approach is that there needs to be a factual basis for the discussion and there needs to be a strong emphasis on sustainable development.  In this respect a fundamental point to be made is that the institutional and bureaucratic processes that result in certain situations, need to be addressed before there is a commitment to taking a physical step which irreversibly and unnecessarily affects our natural environment.

1.3       This submission consists of two parts.  Part One is a brief look at the context for the consultation and some of the basic assumptions.  Part Two is a direct response to the 11 options included in Part 5 of the consultation document and two additional options.  The issues are complex and it is not possible to go in to much detail in this submission.

Part One : Context and General Points

No Crisis – Need a Rational Approach

2.1       The supposed shortage of land for development has been dramatized and typified as a crisis, resulting in emotional responses.  The issue is that there has been a brief shortage in provision of planned and serviced land.  This land needs to be consistently made available to meet the wide range of community needs.  The approach of the Task Force on Land Supply (TFLS) has taken individual and unrelated land types and further emphasized this emotional response.  The need is for proper town planning and implementation policies which ensure a regular supply of land in the right places and with the right connections to public services and transport.  Only by adopting a professional and holistic approach can a high quality environment be created for future generations to enjoy.  The TFLS has an important job to do in assessing the diverse input from the community and providing a rational basis for moving forward in a logical way.

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Questionable Input on Demand Side Particularly for Housing

2.2       No Crisis for Housing – Need to focus resources

2.2.1    There is no absolute crises for housing in the sense that there was in the 1970’s when large numbers of households were living in squatter huts and subject to risk of fire and landslips.  The issues today are less fundamental.  However they are not well defined in the TFLS report and lack a focus.  There is adequate evidence from the government statistics to support this view and a good reference is the Hong Kong council of Social Services Social Indicators of Hong Kong, https://www.socialindicators.org.hk/en/indicators/housing/8.6.   Some relevant indicators are included below:

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2.3       Why such a long Waiting List for Public Housing?

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2.3.1    Much has been made of the numbers of people on the public housing waiting list and the increased time that people have to wait for public housing.  Given the general improvement in housing conditions indicated by the statistics above, this seems unusual.  In close examination of the eligibility criteria for public housing it can be seen that it is a result of changes that have been made to the process rather than physical changes to households’ living conditions.

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2.4       Housing Need and those Inadequately Housed

2.4.1    Much has been made by many groups over the sad state of accommodation for those living in sub-divided flats and in bedspace apartments.  These living conditions are just not acceptable in a modern wealthy city like Hong Kong and they should be given the highest priority.  The problem can be reasonably quantified as government has a definition for those inadequately housed and has assessments as to the numbers of households involved. 

2.4.2    The numbers are surprisingly low at around 115,000 households or 5% of all households. The focus of public housing eligibility should be on these households rather than on those who are adequately housed.  This is explained in the tables below.

2.4.3    A focus on removing the problem for these 115,000 (approximately) households would remove the most critical issue.  It is important that on rehousing the residents of the subdivide flats that the subdivided units be removed and returned to the original state so that the problem does not reoccur.

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2.5       Affordability and Housing Prices

2.5.1    The government does not define housing affordability.  Without a definition it is not possible to identify a problem or to solve it.  Hong Kong is a high cost place to live in and it is evident that on a regular occurance all flats put for sale in the primary market are quickly sold, despite the restrictions that government has imposed to dampen demand.  These demand side controls are in themselves making it more difficult for Hong Kong people to buy an apartment. It has significantly reduced sales activity in the secondary market where entrants into the property market would most likely begin.  There is also evidence to show that the price of property in the Hong Kong market does nof really correlate to the supply of new flats.  The trend is that there is a constant growth in property prices with a few minor fluctuations.

2.5.2    The following slide indicates that the overall expenditure on housing, including public housing, is around 35% which is reasonable in comparison with other similar cities. Some definitions on affordability in Australia and the USA use 35% as a criteria.

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2.5.3    The Supplementary Data in the following table indicates a comparison between public and private housing.  Here it can be seen that for public housing around 11% to 13% is remarkably low, while the private housing at 42% to 44% is relatively high.  However, given the characteristics of the Hong Kong housing market, spending 45% on housing is common and accepted as affordable if wanting to live in this city.

2.5.4    The pie-chart below indicates that 75% of households are living in affordable housing.  Therefore if affordability is to be a significant driver for more housing production, a clear working definition needs to be made so that it justifies the allocation of resources to resolve an identifiable problem.

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2.5.3    The Supplementary Data in the following table indicates a comparison between public and private housing.  Here it can be seen that for public housing around 11% to 13% is remarkably low, while the private housing at 42% to 44% is relatively high.  However, given the characteristics of the Hong Kong housing market, spending 45% on housing is common and accepted as affordable if wanting to live in this city.

2.5.4    The pie-chart below indicates that 75% of households are living in affordable housing.  Therefore if affordability is to be a significant driver for more housing production, a clear working definition needs to be made so that it justifies the allocation of resources to resolve an identifiable problem.

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2.5.6    Administrative Measures making Housing Unaffordable

Hong Kong has a lot of restrictions on the purchase and sale of flats in the private market.  These are imposed by the government and the Monetary Authority and are summarised in the following table.  The need for these restrictions, especially those related to purchases in the secondary market, are a major constraint on people being able to buy a flat.  These controls need to be re-assessed as to their impact on affordability, particularly on the best use of the land that is available to make housing affordable for younger Hong Kong households.

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2.6       Increasing Development Density

2.6.1    In our work in relation to the NDA’s we have identified an unnecessarily low production rate in terms of numbers of flats and population capacity. Representations have been made to the Town Planning Board on this and we summarize the missed opportunities in the following table.  We have not proposed major revisions to the OZP’s but mainly minor changes in development density in accordance with the Hong Kong Planning Standards and Guidelines.  By these simple changes an additional 60,000 flats could be produced, making better use of the land that is going to be produced and service by infrastructure.

2.6.2    The principle must be that the production of development from the available land should be optimized within the normal planning standards that apply.  There is therefore additional capacity in the NDA’s that has unnecessarily been forgone and the government should review the densities of development in a systematic way.  The assumption must be that government is going to invest in the necessary infrastructure so that the best use of any new land will eventuate.

Part Two : Comments on Land Supply Options

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3.1       Brownfield Sites

            Brownfield sites should be a prime focus for future coordinated development. The sites suitable are those near existing or easily planned infrastructure.  Removal of brownfield activities will result in an overall improvement of the environment in Hong Kong.  Many of these activities are located on private land with agricultural status and in New Development Areas (NDA) such as in Hung Shui Kiu, and are owned by developers.  They are suitable for the use of the PPP approach and now that the zoning has been confirmed the release of the land for development must be speeded up.  The existing brownfield activities do not need to be relocated as many are sunset industries which can cease to operate and be replaced by higher value, cleaner economic activities.  Development of brownfield sites must take place in a systematic well planned process rather than just focusing on individual sites.

3.2       Private Agricultural Land and PPP

3.2.1    Many developers land in agricultural status in areas which are suitable for urban development.  This has been accumulated over years in anticipation of future development and many are located in appropriate development locations. The Hung Shui Kiu CDA is a prime example.  However the current package of land exchange options under the Enhanced Conventional New Town Development policy prevents most land owners from applying for land exchanges and implementing development.  A copy of the relevant criteria is attached as Appendix 1.  In that the areas which can apply for land exchanges are only limited to certain zones (Criteria 2), the land must correspond to an arbitrary boundary drawn by government on a departmental plan (Criteria 3), and areas of intervening government land may not be included (Criteria 12).  This is an unnecessary bureaucratic blockage which will only delay development and be reliant on government having to unnecessarily resume land.

3.2.2    The traditional approach where a land owner can apply for a land exchange to implement the zoning of the land should be continued as it is proven to be effective in implementing complex developments, such as YOHO Town in Yuen Long.  This process can produce high quality development including community facilities for government to operate without the need for government funding.  This can be assured under the lease.  Should land exchange applications not be received within a reasonable time after infrastructure is provided by government, then and only then should resumption be undertaken.

3.2.3    The PPP approach is a suitable way for implementing private development on a site in conjunction with the provision of public facilities.  It has been carried out successfully by government in many situations.  A structured approach can be easily established to ensure that it is effective and open. Government already has guidelines for PPP developments established by the Efficiency Unit based on experience in Hong Kong and overseas.  These should be followed, or reviewed and modified where appropriate.

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3.3       Private Recreational Leases and consolidation of Land Extensive Recreational Facilities

3.3.1    The recently completed consultation on Private Recreational Leases (PRL) has included enhanced provisions for opening up of these sites for public access in a structured way.  Should a PRL site meet those requirements it should be able to continue to operate.  The PRL clubs provide an important input into the provision and development of sport which cannot be provided by government and need not be provided by government. 

            PRL Sites

3.3.2    As a matter of principle, given the low provision of sports facilities in Hong Kong and the huge unsatisfied demand then these PRL sites should be retained for sport.  This is a major contributor to the quality of life in Hong Kong and contrary to the recent re-zoning of open space and GIC sites for housing and commercial uses.  The generally small size of Hong Kong flats in makes it more important to ensure the high provision of sports, recreational and cultural facilities outside the home, so as to enhance the general quality of life.

3.3.3    Regarding the Fanling Golf Course (FGC), it is an important sports and landscape resource.  It should be retained as such even if the operation needs to change to meet community requirements.  If the use meets the PRL requirements then it should be retained intact.  The FGC is not located in a place suitable for residential development at this time.  Its use should be retained when the lease expires in 2020 as there is no possibility of the site being ready for development in the short term.  The FGC is not included in an Outline Zoning Plan and that process and the technical studies, need to be carried out before the long term use of the site can be determined.  Also the FGC cannot be developed by itself, but needs to be associated with other land to the north connecting it to Fan Ling.  The implications of doing this need to be carefully reviewed.

            Extensive Government Recreational Facilities

3.3.4    There is an acute shortage of recreational facilities in Hong Kong.  The LCSD annual report indicates that many facilities are being used at capacity, particularly the shortage of pitches for football, rugby and hockey.  Should extensive sites have additional capacity to accommodate more sports then this should be considered as a means for achieving a higher quality of life.  However, they should not be changed to other non-sports uses.  The importance of green spaces in the built up urban area is vital to the quality of city life.

3.4       Reclamation outside Victoria Harbour and the East Lantau Metropolis

3.4.1    Reclamation for development on near shore sites should be considered as a rational way of expanding existing development areas. During the consultations process there have been additional suggestions made of suitable site in the east near Tseung Kwan O in Tolo Harbour and in Tuen Mun.  These sites should be investigated and properly planned for implementation.

3.4.2    The East Lantau Metropolis is not required in the near to medium term, nor probably in the long term given realistic population projections.  It should not be pursued at this time as there are better alternatives but kept as a long term possibility

3.5       Caverns and Underground Space

            This has proved effective for facilities such as sewage treatment plants and waste transfer stations and should be planned in the future.  It is not likely to be a big source of space but ensures effective use of land.

3.6       More New Development Areas in the NT.

            Hong Kong has a long tradition of effectively building New Towns.  This should continue to be done in the NT, through the use of existing land and associated reclamations.  The current studies towards the implementation of the NDA’s is part of the process.  However, to ensure a continuous supply of new serviced land it should be carried out in a systematic manner and must be associated with careful expansion of infrastructure.  In this respect, there is a major need to ensure that transport and sewage infrastructure can be expanded in a cost effective and efficient manner so that additional capacity is created.

3.7       River Trade Terminal

            This existing under-utilisation of the River Trade Terminal could be related to the unnecessary restrictions contained in the lease.  In principle this form of waterfront site in the western part of Hong Kong should be retained as a means for moving goods to the area without the need for road transportation.  It should be retained and the means for improving utilization rates invesitaged.

3.8       Pilot Areas on Fringe of Country Parks

3.8.1    The proposal for developing the Country Parks ignores the original intention of the Country Park Ordinance, the function of Country and Marine Park Board, and undermines the well-established and effective system of protected areas. Development of country parks must not take place without first establishing the overriding public need for a specific site, while there are many alternatives.  Without clear demonstration of making all efforts to minimize the land taken, this would change the basic principle of conservation in Hong Kong, which was to protect lands of high ecological values and water gathering grounds. Any change of the boundaries of country parks without recognition of their special status would set a bad precedent.

3.8.2    Without considering the availability of ample and alternative suitable sites for development, the government has unnecessarily put conservation and housing development in a confrontational position. Hong Kong people appreciate the need for the Country Parks and appreciate the intrinsic value of a large area of green space adding to the quality of living in a dense city environment. By continuing to emphasize the urgency of the development of Country Parks unnecessary social conflicts are being created. Development of country parks is irreversible, and should be regarded as an absolute last resort.  The TFLS has failed to demonstrate the necessity to develop on the fringes of Country Parks when many alternatives, such as brownfields and other idle sites are available.

3.9       Village Type of Development

3.9.1    The small house policy for indigenous villagers is an anachronism which should have limited application to the future development of the NT.  It is wasteful of land and compromises the best use of land in prime locations.  For example, the total area for Village Type Development on the new Hung Shui Kiu OZP is approximately 118 ha or 16.69% of the total OZP area.  This is greater than the area zoned for residential development which is only 87.94ha or 12.46%, and is a poor return on the investment in infrastructure and the production of housing for non-villagers.

3.9.2    Many of the villages have histories of thousands of years, have ancestral halls and traditional burial grounds.  All of these should be respected.  However the issue is how much land should be reserved for expansion of the villages, and in this land utilization context, it should be minimal.  There is no feasible way that the small house policy can continue to provide housing for unlimited future generations of indigenous villagers.  Village zones should therefore be limited to the existing extent of the village and no expansion beyond that granted.

3.9.3    The original small house policy intention is being abused.  It was intended to revitalise abandoned villages and to provide modern housing to meet villager’s needs.  The policy allows the villager to sell the small house to outsiders on payment of a premium.  This abuse of the policy should end and the only person that a village house could be sold to is another indigenous villager.  This simple change in policy would enable the village houses to be ‘recycled’ and meet the continuing demand by using the available housing stock.  If this simple change in policy was applied then there would be no need to consider multi - storey village solutions. 

3.10     Topside Development on Transport Infrastructure

            In principle this is supported as excessive land used for infrastructure is a waste of air space.  However, this principle should also be considered in the alternative of placing as much infrastructure under-ground so that best use can be made of the above ground area. This would be similar to the cavern approach

3.11     Relocation and Topside Development of Kwai Tsing Container Terminals

3.11.1  The proposal to relocate the container terminals from Kwai Chung is considered to be an unrealistic proposal.  The amount of investment in the existing infrastructure is considerable and it remains a very productive port. Dropping to 5th in the world does not mean that it is small, but it continues to serve an extremely important economic role for Hong Kong.  It is a pillar industry and an integral part of the logistic economy.

3.11.2  We are aware through our work with the Container Terminals that there is an ability to increase the storage capacity of the port through mechanization and capacity to construct more logistics related and godown activities above the existing terminals.  In the Hung Shui Kiu OZP 33.34ha is reserved for logistics facilities and 24.80ha reserved for port back-up and workshop use.  It would be reasonable to consolidate these activities at the Container Terminal where they could achieve efficiencies of scale.  By doing this there would be approximately 58ha of land released at Hung Shui Kiu for housing production, providing better locations for people to live in than the compromised and congested location at Kwai Chung.

3.11.3  Should the container terminals reach a stage where they are no longer of economic importance to Hong Kong and the time be considered right to find a better economic use for the land, then that would be the appropriate time to study opportunities.  It may be that this would be a good site for the expansion of the CBD function and a better option than the East Lantau Metropolis.

3.12     New Town on Plover Cove Reservoir

            This proposal is not considered reasonable or sensible.  The reservoir is important for essential water supply and a great landscape and environmental asset.  It is in completely the wrong place for the development of a New Town with no connections to essential infrastructure.  This should be dropped as an option.  However, the possibility of using reservoirs as a location for solar energy production should be given serious consideration.

3.13     Other Land Supply Options

            There are other options for better utilization of land which have not been considered by the TFLS and the following list contains ones which are worth consideration.

            Military Land

3.13.1  The military sites have great potential for development, for some of them are located in the heart of the urban area, such as Renfrew Road Barracks and Gun Club Hill Barracks. For barracks located in the New Territories, some of them are highly accessible to existing roads and infrastructures. There are altogether 19 military sites, cover 2,700 hectares of land.

3.13.2  Given the need to identify more sites for different forms of use, the military sites that are not being used to capacity or are suitable for different types of uses need to be considered.  There should be a transparent evaluation of military use versus public use of these sites. Article13 and 15 of the Garrison Law provide a legal foundation and mechanism for the Hong Kong Government and the military to do so. 

3.13.3  The Hong Kong Government should identify a few of the most suitable sites and commence discussions with the military authorities as to the most appropriate long term use of these sites and if they could be handed to the Hong Kong government for more suitable uses.  This could include the swap of some land in prime locations for a new site in more remote locations.  This need not be a short term process or solution, but one where the discussion should commence now and the proposals put to the Central Government for consideration at an appropriate time.

            Review of Temporary Land Allocations

3.13.4  Liber Research Community (https://drive.google.com/file/d/1huTJGrdhr-mJYKENZVuZwGPWosFdmW0C/view) has recently identified that there is about 260ha of land currently being used for short term purposes, the main portion being for open storage.  Many of these sites are suitable for development into permanent uses and could be a significant help to meet the various need of the community.

3.13.5  From our own experience dealing water sports organisations and NGO’s, it is clear that current land policy and implementation mechanisms leave significant sites not accessible to the public and not utilised for the permanent uses.  Many of these sites are reserved for public open space or GIC uses, uses which significantly contribute towards the quality of life of residents.  There is a need to bring the permanent use forward much quicker, and if government funding and procedures are not able to do so, then there is a need to enable community groups, NGO’s and semi-public organisations to be able to implement these facilities through a more permanent land grant system.

3.13.6  The availability of such large areas of temporary use land in Hong Kong is symptomatic of the need for a review of the land management and land administrative procedures so that sites such as this do not remain as a wasted and under utilised resource.

4.         Conclusion

4.1       The fundamental point is that there is not a land supply crisis that requires an uncontrolled and emotive attempt to implement development proposals which are not properly thought out and not properly planned and coordinated.  There is a need to ensure that there is a consistent output of land to meet community needs and that should be part of an ongoing process.

4.2       The study has built on previous studies by government and has accepted statistics and conclusions from previous government studies without critical examination as to their validity for the task that has been set.  This is a reasonable approach given the timeframe within which the TFLS has been given to work.  However, this submission and other submissions will point out problems regarding assumptions and base data which cannot go without further investigation.  Assumptions and reasons for apparent housing supply problems are particularly relevant.

4.3       Provision of land will not solve many of the issues that have arisen during this study process.  The TFLS must therefore indicate to government the potential non-land supply options that have been put forward.  In particular the need to review relevant policy and procedural processes which result in issues need to be identified and prioritised.  In this regard the need to deal with housing affordability in ways other than housing production need to be given a priority as the time frame for housing production is too long to quickly address these issues. An alternative approach, or approaches, is required.

4.4       Finally, a problem is unlikely to be resolved if it cannot be clearly defined and a causal relationship to relevant factors also clearly defined.  This is particularly relevant to housing need, housing affordability and the early resolution of the most critical problem of a relatively small number of households living in totally unacceptable housing conditions.  The particular issue of inadequate housing is worthy of a Task Force of its own so that this unnecessary situation can be resolved within the next 2 to 3 years.

4.5       We hope this submission is helpful.  We cannot include all of our points in this submission and would be more than willing to discuss any of these issues with those processing the public engagement process.

Masterplan Limited

September 2018