Hong Kong's Housing Shortage Could Dent Disney's Dream

By Frederik Balfour / Bloomberg | February 27, 2018 10:44 AM SGT
Hong Kong’s leaders are leaving no stone unturned in their quest to unlock more land for homes.
Golf courses, amusement parks and container ports are all being studied as sources of potential land supply by Chief Executive Carrie Lam’s government, which is seeking ways to solve a chronic housing shortage. The tight supply of housing has helped fuel soaring prices in the world’s least affordable city, where taxes and mortgage curbs have failed to cool the market.
The potential seems vast: Residential use accounted for just 6.9 percent of Hong Kong’s roughly 111,100 hectares (274,500 acres) of land in 2016, the most recent figures available from the city’s Lands Department. Although urban centers in the city are among the densest in the world, about three-fourths of its land mass is made up of open spaces.
Walt Disney Co.'s Disneyland Resort in Hong Kong, China, in August 2015
Lam last year appointed a task force to help boost land supply, saying at the time that a public consultation period would start at the end of March. Here are six potential sources of new supply under consideration by the task force:
Hong Kong has been filling in its harbors and bays for more than 125 years and most of its downtown financial district, along with Disneyland and the airport on Lantau Island, sits on reclaimed land. Reclamation accounts for about 6 percent of the territory’s land. Stanley Wong, chairman of the task force, said that approach could create as much as 1,400 hectares of additional land by 2030, including a 1,000 hectare man-made island called East Lantau Metropolis that could house 700,000 people.
Country Parks
Another proposal is to build public housing on the peripheries of country parks, which account for almost 42 percent of land area. The Hong Kong Housing Society plans a feasibility study this year but the government has not made its position on this clear, said Wong. This idea has been unpopular with conservationists. Paul Zimmerman, chief executive officer of urban advocacy group Designing Hong Kong, said the plan would undermine the unique strength of Hong Kong: Access to absolute wilderness that’s rare in a major city. "Parks should be treated as special assets and we believe this plan is very dangerous and should be at the bottom of the list," he said.
Golf Courses and Disneyland
The historic Hong Kong Golf Club, located on 172 hectares in Fanling could be bulldozed to make way for a many as 13,200 homes if the government decides not to renew its lease in 2020 on a site occupied since 1911. Public consultation on the fate of the club, home of the UBS Hong Kong Open, begins at the end of March. Another option, from a think tank called Global Institute for Tomorrow, proposes that the 60 hectares reserved for expansion of Hong Kong Disneyland — which just reported its third consecutive year of losses — could be used to provide housing for 39,900 families.
Sun Hung Kai Properties Ltd., Henderson Land Development Co., New World Development Co. and CK Asset Holdings Ltd., are sitting on land banks holding more than 1,000 hectares of unused farmland. These could yield 500,000 new homes over the next 25 years according to CLSA Ltd.’s CEO Jonathan Slone. But developers say the government charges them very high premiums for converting farmland to residential use. One option the task force is considering is a public-private collaboration where the government would cut those premiums and help pay for roads, water and other infrastructure serving the sites, while the developers provide some affordable public housing.
Container Ports
Hong Kong, home to one of the world’s busiest ports, could free up some 390 hectares of land by relocating the Kwai Tsing container terminal — some eight miles north of the city center — to a more remote location, according to the task force. No estimates have been made for the cost of such a massive infrastructure investment. Also under consideration is "topside" development, which involves building homes above the existing terminal, although that would require the city to resolve the issue of noise and air quality.
Kwai Tsing container terminal (Photographer: Qilai Shen/Bloomberg)
Revamping use of of so-called brownfield sites on private land in the New Territories, currently occupied by a smattering of open air storage facilities, warehouses and carparks, could free up 1,300 hectares of land. The plan would involve relocating these sites into multistory industrial structures, reducing the amount of land they occupy by two-thirds. Lawmaker Kenneth Chan said on Radio Television Hong Kong on Feb. 22 that part of the government’s projected HK$168 billion ($21.5 billion) budget surplus for the year ending March could be spent on building these new structures.
— With assistance by Adrian Leung
This story, written by Frederik Balfour for Bloomberg, first appeared on Feb 27.