How mixed development could ease housing shortage

November 28, 2015 08:03
The Hong Kong government should consider transforming Hung Shui Kiu into a logistics center to provide more job opportunities for local residents. Photo:

The previous article (see below) mentioned that the New York City government seeks to enhance economic diversity in communities by implementing an Inclusionary Housing Program (IHP).

Under the program, developers of apartment buildings in designated areas can apply for a maximum floor area bonus of 33 percent if they set aside for middle- to lower-income households 20 percent of the units.

The Mixed Development Pilot Scheme (MDPS), shelved by the Hong Kong government since the property market slump in 2002, resembles inclusionary housing.

The successful bidder for a project under the scheme must set aside a certain number of units (equivalent to at least 30 percent of the total salable area).

These randomly drawn units will be sold as Home Ownership Scheme flats to eligible citizens at prices set by the government.

The chief executive's policy address this year stated that, drawing experience from the MDPS, the government will explore ways to further leverage the private sector’s capacity to expedite the supply of subsidized flats.

This could help rectify the imbalances in the housing market.

Inclusionary housing in the United States differs from the MDPS in terms of operation and goals.

The US model allows citizens to rent or buy the affordable units, while units under the Hong Kong scheme are for sale only.

Moreover, inclusionary housing aims at dispersing the poor population and facilitating economic integration.

The MDPS, however, was not tasked with this mission, but essentially intended to accelerate housing supply and assist in homeownership.

In September, the New York City government kickstarted a consultation and proposed mandating the IHP in designated areas and raising the proportion of units set aside to 30 percent in an attempt to build “a long-term, stable reservoir of affordable housing”.

In recent years, the number of households on the waiting list for public rental housing in Hong Kong has been on the rise, exceeding 280,000 this year.

On the face of it, there is a widespread consensus that there is a need to identify land for housing development.

Beneath this façade, however, lie all kinds of undercurrents against public rental housing in various districts.

Some complain about obstructed ventilation, while others protest against the decline in house prices due to the proximity of public rental housing estates.

This demonstrates the persistence of the "not in my backyard" (NIMBY) mentality.

Therefore, neither inclusionary housing nor mixed development projects with subsidized units in the same building as others is likely to be palatable to Hong Kong society.

Regarding MDPS projects, some suggest charting the middle ground by randomly selecting entire buildings to be HOS flats.

This proposal, which cushions the impact on house prices and allows the accommodation of different classes in the same project, is worth consideration by the government.

It would be unrealistic to expect MDPS projects alone to be game-changers, though.

To build diverse communities, extra effort should be put into the planning stage.

Take Hung Shui Kiu as an example.

Organizations such as the New People’s Party suggest establishing a “Hong Kong Logistics Park” to boost the employment of residents in the area.

This would spare residents the need for long-distance commuting and reduce pressure on the railway system.

Apart from integrating the poorer population into low-poverty neighborhoods, another, more feasible direction is to support the development of lower-income districts.

One way is to relocate government offices to those districts.

There are three advantages.

First, it can save public money, given the lower rents in non-commercial districts.

Second, it can release land resources in central business districts and increase the supply of offices.

Most importantly, it will demonstrate government’s confidence in lower-income districts and set an example for other public entities and businesses to follow, bringing in more visitors, sales and job opportunities.

Few departments, however, have so far been relocated to the New Territories.

Given the increasingly frequent cooperation and exchanges between the mainland and Hong Kong, as long as adequate commercial and transport facilities are in place, the New Territories is blessed with enormous development potential.

Yet, as Thomas Chan Man-hung, director of Hong Kong Polytechnic University's Public Policy Research Institute and head of its China Business Centre, points out, the government still positions the New Territories as “low-density residential areas in the suburbs” and lets slip the opportunities to develop the region into a second center that shines and prospers along with Central.

In the light of society’s needs and close ties between the mainland and the city, the administration ought to progress with the times and formulate a more proactive strategy to relieve the high density in Kowloon and Hong Kong Island and galvanize the takeoff of the New Territories.

Ben Lee is the writer of this article.

Why HK should promote balanced development of districts (Nov. 7, 2015)

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Savantas Policy Institute