Land grabs for housing are out of the question

In the great public debate on government proposals to increase housing supply, one important principle of the Hong Kong economy has been glossed over, or even trampled on. That principle is respect and protection of private property.

At issue is the proposal to convert big tracts of farmland owned by some of the largest property developers into housing development. The government has floated the idea of cooperation with these developers to build public housing on parts of these lands.

In fact, there is nothing new about such arrangements. The government had in the past worked with private developers in developing land for public housing. Such joint ventures can help simplify and speed up the construction process for the government.

But in this politically charged environment, a sound idea that was proven repeatedly to have worked for the benefit of the public has been senselessly attacked by populist politicians and social activists as a conspiracy of collusion between the government and powerful business interests.

Of course, such charges are groundless as they were made even before the terms of cooperation have been proposed. The government has reiterated that no concession will be made on the cost of land-use conversion.

Some social activist groups have called on the government to use a provision in the law that empowers it to acquire land from private owners. But the law states quite clearly that the government must justify such a move with convincing evidence of public interest.

For instance, the government invoked the law to acquire numerous properties in urban districts to clear the way for construction of the underground railway. Public housing is different from the building of the subway system in the sense that public housing only benefits people in the lower-income group who are deemed to be unable to afford to buy their homes at current market prices.

To be sure, public housing is widely seen to be a major component of social services in land-scarce Hong Kong. But it should not be used as an excuse to infringe on the other people’s right to property ownership, even when those people were property developers who have been widely criticized for pushing up home prices by cornering housing supply.

Such accusations are not entirely fair. The developers have certainly made a lot of money from rising housing prices. But they also take big risks by paying ever-rising prices for land acquired from the private sector or in government land auctions.

The land developers own in the rural districts in the New Territories was acquired in small lots one at a time over many years. A large amount of capital is tied up in those land plots because redevelopment is not always assured.

Approvals to convert these plots of farmland for redevelopment are not easy to come by. If approved, the government would invariably demand a hefty premium to cover the cost of building the transport and other infrastructure facilities to support the new community with a population numbering in tens of thousands.

There are other ways to create land. But most of these methods, including land reclamation, are costly and time-consuming. One of the quickest and least-cumbersome ways is to cooperate with rural land owning property companies to build both public and private housing on converted farmland.

It can be expected in this divisive political environment that any terms arrived at between the government and private developers will be held in suspicion by critics and opposition politicians. Therefore it is important to ensure negotiations involve all parties and the cost structure of the relevant projects are transparent and clearly laid out so the public can judge for themselves if public funds have been in anyway misused to fatten the wallets of developers.

The public must also understand that forced acquisition of land for public housing development is not a viable option. Imagine this. If you own a home, you have vested interests in the neighborhood where you live. No doubt you, like everyone else, would want to safeguard your vested interests and expect others to respect your right to do so.

That’s a basic principle of the capitalist system and a market economy that Hong Kong people wish so much to preserve.