Realty developer Emperor International Holdings, owned by entertainment mogul Albert Yeung Sau-shing, has been putting up ads like this one for Upton (維港峰), an upmarket waterfront residential development in Sai Wan.
Those with some knowledge of Hong Kong’s land tenure regime and policy changes may be scratching their heads: Isn’t it that new land leases are good for only 50 years since the 1997 handover? How come a new development has a land lease of 999 years?
It’s because the plot on Connaught Road West where the 41-storey edifice now stands, has a land tenure of 999 years, granted sometime around 1900, before the colonial authorities in London banned such land tenures in Hong Kong, according to historical archives.
The land, along with its ultra-long lease, must have changed hands multiple times since then, before Emperor acquired it for redevelopment in 2011.
Understandably, homes are sold with a fat markup for the plot’s long tenure, when most other new flats across the territory are built on lands leased for just 50 years.
Among other properties, Emperor also owns Wincome Centre at Des Voeux Road Central and a mixed-use tower on Russell Street in Causeway Bay, both of which also have 999-year tenures.
In Hong Kong, properties with tenure of 999 years and other lengths of lease coexist and are usually located close to each other.
Though both of them are leasehold interests, the 999-year tenure, almost like a hereditary one, is a close approximation of a freehold interest.
The only exception is the site of St. John’s Cathedral in Central, the Diocesan Cathedral of the Diocese of Hong Kong Island and the seat of the Archbishop of Hong Kong.
The site is the only freehold land with unlimited time ownership, granted in pursuant to the Church of England Trust Ordinance.
Boundaries of tenures
Along Boundary Street, a bustling thoroughfare in the heart of Kowloon, one can find towers and tenement blocks that look almost alike but whose prices vary a lot, depending on which side of the street they are built.
As its name implies, it’s a boundary between the ceded area of Hong Kong and the borrowed part from China.
Leases of land north of it – areas in the New Territories and New Kowloon – were made for the residue of a term of 99 years less three days from 1 July 1898, after London signed the Convention Respecting an Extension of Hong Kong Territory to lease the areas for 99 years.
All such leases would expire in 1997 as noted in the colonial government gazettes.
That’s why a home north of the street was not a permanent asset to some extent and thus sold at a cheaper price.
Understandably, the city’s rich and powerful rarely dwell in the New Territories.
South of the Boundary Street, prized assets with 999-year leases include the site of Swire Properties’ Taikoo Shing, formerly acquired at the end of the 19th century for the Taikoo Dockyard.
In Hong Kong’s early days, leases were for terms of 75, 99 or 999 years, and subsequently standardized in Hong Kong Island and Kowloon to 75 years at London’s instruction at the turn of the 20th century.
Such leases are renewable for another 75 years at a re-assessed annual rent under the provisions of the old Crown Leases Ordinance.
A new provision was set in the British-Sino Joint Declaration: all land leases granted since May 27, 1985 (the date of entry into the Joint Declaration) must be made for terms expiring not later than June 30, 2047, the supposed expiry date of “no changes for 50 years” as Beijing pledged in the document.
All land leases north of the Boundary Street which would have already expired in 1997 were given a uniform extension expiring not later than the same date in 2047, with additional premium waived, though an annual rent based on the rateable value of the property is being charged.
Interestingly, Hong Kong saw a spike in land sales after the Joint Declaration was signed on December 19, 1984 and before it came into effect on May 27 the following year, the start of Hong Kong’s transition period.
What fueled the brief bonanza throughout these few months were the perceived changes to tenures: lease of a plot sold before May 27, 1985 would still have a term of 75 years plus an extension of the same number of years, transcending well beyond 2047, but the lease of the same plot sold in the transition period would expire no later than June 30, 2047.
Swire managed to snap up prime sites in Admiralty in one fell swoop before May 1985 for major parts of its flagship development Pacific Place. Thus the lease will expire in 2060 and may be extended till 2135.
And, in 2013 Swire sold Festival Walk, a sleek 1.25 million square foot mall cum office development located in Kowloon Tong, north of Boundary Street, to Temasek’s Mapletree Investments for HK$18.8 billion.
Rumors have it that the short tenure of the site, 34 years remaining at the time of transaction, was one of the British conglomerate’s considerations for its sale of one of Hong Kong’s most vistied and profitable shopping destinations.
Post-handover, the SAR government revised general provisions covering land leases, with the most notable change being a 50-year term limit for new leases of land, plus an annual rent equivalent to 3 percent of the rateable value of the property.
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Boundary Street: A metaphor for Hong Kong’s uncertain future