The Ronald Coase Centre for Property Rights Research at the University of Hong Kong has made a couple of proposals to unleash a good quantity of privately owned land for housing development.
The first one is called Land Readjustment. It is a mechanism under which private landowners voluntarily contribute their land parcels to the government in return for development rights in a newly replotted and readjusted site.
Currently, there are a lot of private land plots in the city proper and the New Territories. However, these sites usually lack infrastructure or scale, and hence, they cannot be properly developed.
The conventional land assembly methods, such as unilateral massive land taking by the government, may be open to disputes, severe criticisms and opposition. Land readjustment offers an alternative option that allows all stakeholders to share the fruits of economic development.
However, successful land readjustment schemes require all stakeholders to be open-minded and collaborative, and, in some cases, innovative ideas can help solve deadlocks. Some pre-land readjustment experimental or consultative sessions conducted by independent bodies or professionals may ease the bargaining process. Mediation or even arbitration mechanisms can be put in place if necessary.
The researchers also suggest government consider issuing “Land Bonds” as a tool to assemble suitable privately-owned land in the New Territories, including idle agricultural land in the hands of major developers and land owned by indigenous villagers.
Land bond holders can then redeem other land plots, including rezoned and readjusted land in the New Territories, as well as new land parcels that the government will produce through reclamation.
Land bonds will be freely transferable in the market or on a public trading platform at market prices. They can also be used for bidding at government land auctions.
Land bonds encourage landowners to surrender their land first. The government can then build up the land reserve before deciding on development details, such as usage and schedule.
However, both land readjustment and land bond mechanisms involve marketmechanism.
As location is critical to the value of a land site, whether it is land bond or land readjustment, the most difficult part is setting up a transparent and fair mechanism to conduct the exchange of land.
This article appeared in the Hong Kong Economic Journal on July 31
Translation by Julie Zhu
[Chinese version 中文版]
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