Concrete Analysis | Can Hong Kong increase its housing supply through the Land Sharing Pilot Scheme?

A part of the government’s short to medium-term strategy to ease the land and housing demand in Hong Kong, the Land Sharing Pilot Scheme can potentially unlock 150 hectares of land by changing land zoning and incentivising landowners by providing them with more than four times the plot ratio of the original zoning.

Under the scheme, the government will facilitate the provision and improvement of public infrastructure and Government, Institution or Community facilities, as well as shorten the statutory processing time, which cannot be achieved solely by private developers.

The government’s Task Force on Land Supply estimated that shortage of land for residential use would be 108 hectares by 2026 and 230 hectares by 2046. The government has been looking into means of increasing housing supply by 600,000 units in a staged approach. In the short term, the government intends to optimise existing public housing estates through infill development. In the long term, the study on Lantau Tomorrow is a positive strategy to satisfy the housing demand.

The scheme seeks to complement the government’s grand blueprint for the medium-term housing supply. It seems reasonable. But when it comes to implementation, is it attractive enough for developers? From their perspective, the question is whether it is worth exercising resources and developing their land under the scheme.

For instance, the current statutory plot ratio restriction for recreational land is 0.2 times. Through the scheme, the land’s development potential might be increased to a plot ratio three times the current size. After this, 70 per cent will be set side for public housing, while 30 per cent will belong to private developers for private development. Irrespective of whether it is a domestic or non-domestic plot ratio, the original 0.2 times will be increased to 0.9 times for the project proponent or private developer.

Whether the more than four times increase in plot ratio is attractive enough for developers to join the scheme remains to be seen. Developers, who are profit driven, might not necessarily be willing to develop private housing next to public housing or starter homes, and might consider the scheme’s incentives only marginally sufficient. Yet it provides some kind of motivation for developers to consider.