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Opinion | Hong Kong land and housing supply must flow even in an economic downturn
- Rather than be deterred by sluggish market sentiment, the government should adapt its approach to land creation and housing construction – by sequencing its development priorities, offering smaller land parcels, or turning more land over to building subsidised housing
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In the run-up to his budget speech this month, Financial Secretary Paul Chan Mo-po forecast a deficit of more than HK$110 billion for the 2023-24 financial year. Nevertheless, he reiterated the government’s commitment to land creation despite the recent fluctuations in the property market.
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Market sentiment, however, remains sluggish. Under a land exchange offer, the government was in talks with the owners of six private sites in the Kwu Tung North and Fanling North new development areas, but no consensus was reached on the amount of the land premium by the deadline of December 31. The failure of the land swaps means that, rather than generating income through land premium payments, the government had to offer compensation to resume the land.
Responses to land tenders have been poor as well. Hong Kong saw a record six failed land tenders in 2023. With land sales down to a trickle and fiscal reserves drying up, there have been calls to defer or even scrap land development projects.
Hong Kong is at a crossroads again. The last time the city halted all land creation and slowed housing construction, the hiatus lasted 10 years and caused shortages and social problems that we are still grappling with today.
Learning from this experience, Hong Kong must press on with land creation and housing construction, but with a systematic approach that makes the most of our limited resources.
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In terms of land supply, priority should be given to implementing planned land development projects such as the Kwu Tung North new development area, where an estimated six years is needed to produce spade-ready land. With the Kwu Tung MTR station scheduled for completion in 2027, any further delays in land resumption would mean falling further behind this milestone and creating a gap in the supply of spade-ready land.
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