'Sweetheart deals'with developers can only create distrust

Hong Kong think tank recently published a research report urging the government to seek opportunities to jointly development large tracks of farm land in the New Territories acquired by private developers over the years. It also proposed launching more ambitious and aggressive ocean reclamation projects in various coastal areas of Hong Kong to create new land for development.

The report, comprehensive as it is, however, failed to come up with anything new. Outgoing Chief Executive Leung Chun-ying has been telling Hong Kong people that land creation is key to the government's efforts to address the city's pressing housing shortage problem. But, the resulting increase in the supply of new apartments has failed to rein in soaring property prices so far.

Economists and property experts are asking how big an increase in supply would be enough to bring down prices, while the widely "inelastic" demand for homes continues to be fueled by low borrowing costs and the huge inflow of overseas capital.

Sea reclamation is one of the most cost-effective ways of providing more land for development. Hong Kong has been doing this for as long as anyone can remember. Nearly all the flat land on Hong Kong Island had been reclaimed from the harbor, which has been shrinking in size at an alarming rate in past decades.

Large-scale reclamation projects had gone ahead with little opposition in the past when environmental protection was a notion shared by only a small minority of the population. But, things have now become a great deal more complicated, and any reclamation project will be tightly scrutinized by neighborhood communities, environmentalist groups and their political allies in the legislature.

The public has taken a negative view on reclamation. The risk of a political backlash is enough to prompt the government to consider other options before proposing a significant reclamation project anywhere in Hong Kong although it's less costly than leveling a large swath of hillside for land.

The think tank's other suggestion, which involves the complex process of working out a deal with private developers, is considered by some analysts as unrealistic. It's widely known that several builders have been holding large tracts of farm land they had acquired in small parcels over a long time. They're waiting for the government to build the infrastructure that would make developing the land financially viable.

Any government attempt to develop the infrastructure in exchange for a developer agreeing to build a specified number of public-housing units could stir public suspicion of a "sweetheart deal". It's always better for the government to stay out of the market and concentrate on creating development opportunities on land it owns.

(HK Edition 05/05/2017 page9)