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Economy

Hong Kong's options for housing crunch likely to face resistance

Efforts to boost land supply over 30 years draw fire from environmentalists, developers

Hong Kong's ideas for solving its housing crisis include turning a golf course into residential units and building homes above one of the city’s busiest container terminals.   © Reuters

HONG KONG -- Local officials presented 18 proposals to the public Thursday designed to combat Hong Kong's expensive housing and long-term land crunch, including building homes above one of the city's busiest container terminals, but all of the options are expected to encounter opposition from interest groups.

"We are facing a very imminent land shortage," Stanley Wong Yuen-fai, chairman of the government-appointed Task Force on Land Supply, told reporters as his panel begins a five-month period of consulting the public. The proposals, which also include turning a golf course into residential units, seek the best uses of the city's land for the next three decades.

After eight months of study, Wong concluded that Hong Kong will face a shortage of at least 1,200 hectares of usable land in the long term, with 800 hectares needed in the next 10 years.

The shortfall results mainly from a slowdown in land development, Wong said, which has lagged the growth in households and population over the past 15 years. The shortage could be even worse, he said, as the study did not consider the additional land required for medical and elderly care facilities due to the aging population.

"Obviously, the government is trying to address the pressing housing shortage issue in Hong Kong," said Denis Ma, head of research for Hong Kong at real estate services company Jones Lang LaSalle.

But Ma was skeptical about how many of these options can be realized. "Some of the proposals have been discussed for many years," he said. "The fact that they've yet been implemented reflects the difficulties behind each."

The fastest options include developing brownfield sites owned privately, tapping agricultural land held by developers and relocating recreational facilities that occupy extensive land, according to the consultation paper. These alternatives would provide additional space within 10 years, but each sparked fierce objections from interest groups when they were first suggested by the government.

The longer-term options requiring 10 to 30 years could face even more hurdles. They include development in the periphery of the city's beloved country parks, relocation of a busy container terminal and near-shore reclamation outside Victoria Harbour.

Andy Chu, a campaigner at Greenpeace, opposes using country parks, the sea or farmland for residential developments, and the environmental group accuses the government of "overstating the land supply urgency in order to plunder natural assets." Chu urged Hong Kong officials to focus on developing brownfield sites instead.

The pressure from groups as varied as environmentalists, landlords, private developers and golf lovers has made increasing the territory's land supply one of the toughest tasks for Hong Kong administrations during the past decade.

Land reclamation slumped about 80% between 2001 and 2015 compared with the 1985-2000 period, government data shows. Annual new residential unit completions decreased by 57% between 2007 and 2016 compared with the preceding decade.

By contrast, residential prices have more than quintupled since 2003, while consumer prices rose only 43.5% during the period. Transactions hit a 20-year high last year, with home prices surging 16.7%.

But even the new development options will not prevent Hong Kong's runaway property prices from rising, said Chiu Kam-kuen, head of valuation and advisory services for Asia Pacific at Cushman & Wakefield.

"All the 18 options can't meet the pressing need of housing supply for the next few years," Chiu said, noting that even the easiest choices would need three to five years to bear fruit.

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