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Short to Medium Term Option
Tapping into the Private Agricultural Land Reserve in the New Territories

Why Should We Explore Public-Private Partnership (PPP)?

According to information available in the public domain and rough estimates, major developers are believed to be holding no less than 1,000 ha

Some of them may overlap with NDAs or brownfield sites, hence the amount of potential new land supply could be lower.

of agricultural land in the NT. This is about one quarter of the existing built-up area

Excluding rural settlement.

for public and private housing flats. Land resources of this scale, if utilised properly, would have a major positive impact on Hong Kong's housing supply.

At present, there are two main approaches to unlock the potential of large-scale private agricultural land in the NT, namely (i) statutory resumption of the land under the Land Resumption Ordinance (Cap. 124) (LRO), as in the case of taking forward the MDA or other major development projects, and (ii) developers seek to change the use of their land in the NT (for example, to change agricultural land to residential use) through planning applications to TPB, and through lease modifications or land exchange applications to the Government, so as to enhance the site's development potential. In some cases, these planning applications have been unsuccessful mainly due to land use incompatibility or inadequate infrastructural capacity. For those cases which secured planning permission, the scale of development in terms of plot ratio is relatively low.

PPP is not a concept entirely new to Hong Kong. There are precedents, such as certain development projects for the Sha Tin New Town.

  • In the mid-1970s, private developers were invited via tender to participate in the development of Sha Tin New Town. A joint venture comprising four developers was responsible for the reclamation, formation and construction of a site of around 56 ha.
  • Upon completion, 70% of the land was passed to the Government for public housing and infrastructure development, whilst the rest was retained by the private developers for developing a major private estate (City One Shatin), supplying a total of some 10,600 private housing units.

Regarding the use of private land reserve under PPP to provide housing, the following factors have been suggested for inclusion in the proposed model:

  1. Infrastructure to be provided by the Government
    This would involve the construction of infrastructural facilities by the Government to make the local infrastructure better able to cope with the new housing on private land and the surrounding area. This would unlock the potential of the land for higher-density development, for example through increasing plot ratio, to more effectively realise the potential of existing land.

  2. Contributions by developers
    If the Government has to invest in infrastructure to make PPP possible, participating developers should ensure that higher-density development is compatible with the local existing and planning context and commit to building a certain portion of affordable housing (such as "Starter Homes" or HOS flats) in their projects. The construction and relevant costs for these should be borne by the developers. This model can utilise land owned by the private sector as well as their architectural and marketing expertise to provide more affordable housing. The proportion of public and private housing will depend on Government's policy and input of infrastructure.

  3. Planning and lands procedures
    The existing statutory procedures and land administration policies will continue to apply. Firstly, zoning of the private-owned agricultural lots will need to be changed to "Residential" or others and, where appropriate, the development density will need to be increased. TPB will then exercise its planning-related statutory rights as usual. Secondly, the designated use of the land as specified in the lease will need to be modified, after the developer has made payment of the full market value.

  4. Fairness and transparency
    All interested developers may apply to participate. There should be an open, fair and transparent mechanism to ensure that relevant applications are assessed objectively and consistently, with a view to ensuring the best use of public resources and the achievement of public interest and stated objectives of the Government's housing policy. The arrangement is to alleviate any public concerns about possible collusion between the Government and businesses.

Benefits of Development

The investment in infrastructural facilities under PPP models can help unlock private land resources for housing and public facilities, and benefit both the existing and new population.

Developing private land through PPP model should bring about more affordable housing in a more efficient manner, as well as offering diversity in building designs.

Costs of Development

The basic cost of private land development includes mainly supporting infrastructural facilities such as roads, water supply, sewage and flood control facilities.

The PPP arrangement may accelerate rural land development. Some suggest that this may affect the development of local agricultural industry, and may pose threats to areas with high ecological value.

Challenges and Uncertainties

Currently, there is no PPP model tapping into the private land reserve. Whether this can be materialised depends on the relevant policies, arrangements of the schemes and the willingness of the private sector.

The provision of infrastructural facilities by the Government would have to be subject to the approval of statutory processes, including planning, design, applications to fund the work, resumption of land, relocation and compensation. There are uncertainties surrounding the complexity, costs and time involved.

Some suggest that the PPP model will encourage developers to buy and hoard more agricultural land. They believe that the Government should make wider use of the statutory land resumption power provided for in the LRO and, by doing so, perform a leading role in development. However, invoking the LRO requires an established "public purpose". Unless the relevant "public purpose" is demonstrated, the Government cannot make use of the LRO to resume private land.

  • Generally speaking, land resumption for a "public purpose" usually takes place in development projects for new towns, public housing, and community facilities under the Government's public works programmes such as schools, parks, hospitals and welfare service complexes.

There have also been suggestions that one of the guiding principles of the PPP model is that there should be an appropriate ratio between the social benefits generated by the increased housing supply of each project and the economic benefits gained by the developers.

Better use of private land for purposes with greater social benefits is built on a credible mechanism. If using the PPP approach to develop private land is preferred, the Government has to set up an open and fair mechanism in considering how to select the relevant sites for carrying out PPP projects, and for deciding the inputs of the Government as well as the proportion of public-private housing units.

The Government has to devise objective criteria to ensure that potential market players are on a level playing field, and avoid criticism of collusion between the Government and businesses. The Government also has to set clear criteria in deciding the details of the development projects, including the public works to be undertaken by the Government, the proportion of public and private housing units, and the subsequent property rights and management arrangements.

Key Points

  1. The community can explore whether the PPP approach should be adopted and how it can make better use of private land, in particular agricultural land in the NT, so as to bring greater social benefits. For example, whether the Government should provide infrastructural facilities on the periphery of private land to promote higher-density development in the whole area (including private land); and whether the Government should request private developers to provide affordable housing, in addition to private flats, to meet the housing needs of the public.
  2. If private land and the efficiency of the private sector can be optimised, it is believed that this can bring a positive impact to Hong Kong's housing supply, particularly in the short to medium term.
  3. The discussion has to be built on a fair, open and transparent mechanism for the PPP approach established by the Government, to assess each application objectively based on the set criteria for selecting appropriate projects in the public interest.
| Last Revision Date: 5 December 2018