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Northern Metropolis
Opinion
SCMP Editorial
Editorial
SCMP Editorial

Consortium that won Northern Metropolis plot shows way forward

The joint venture comprising mainland heavyweights and a Hong Kong developer indicates that a diversified model could be the way to go for the mega-project

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The Hung Shui Kiu pilot area in the Northern Metropolis on August 25. A consortium comprising mainland Chinese state-owned and private companies alongside a major Hong Kong developer has won the first “large-scale land disposal” project in the Northern Metropolis for HK$1.03 billion. Photo: Dickson Lee
SCMP Editorial
Editorials represent the views of the South China Morning Post on the issues of the day.
The HK$1.03 billion (US$132 million) tender for 10.5 hectares in the Northern Metropolis is a landmark in Hong Kong’s development. A consortium comprising five mainland state-owned and private companies as well as local developer Sino Land has been awarded the first batches of land in the pilot area in Hung Shui Kiu. The mainland partners will diversify the financial risks and help Hong Kong align with national goals under the 15th five-year plan. The transaction sets a good example for structuring complex, multifaceted urban development. On the face of it, the land premium does not reflect a project of this scale. Viewed in isolation, the figure understates the underlying economics, but the true financial commitment is staggering, with the total investment projected to reach HK$16.8 billion.

This highlights the complexity of the project. The consortium is taking on multibillion-dollar responsibilities for infrastructure development and land formation, costs that would otherwise be borne by the government. By shouldering them, with Beijing’s support, the developers are demonstrating long-term commitment and confidence in the Northern Metropolis project.

Even though the land premium looks low, this is still a significant signal from the market, given scepticism about how enthusiastic developers would be about the project. Critics questioned whether the private sector – and specifically major mainland enterprises – would put real capital behind such a long-term, visionary government initiative. On a massive, multifaceted development such as this, a consortium of local and mainland groups has proved to be the way to go.

The tender answers doubts, despite a challenging macroeconomic environment. As Secretary for Development Bernadette Linn Hon-ho rightly noted, these enterprises have cast a tangible “vote of confidence” in the Northern Metropolis. The willingness to absorb high infrastructural costs and commit billions to a multi-year timeline speaks volumes about recognition of the project’s strategic value.

Mainland Chinese enterprises are now set to be key players in projects in the Northern Metropolis, a 30,000-hectare mega-development close to the city’s border with the mainland, destined to become an economic powerhouse and housing hub. Real estate experts say more flexible tender arrangements and other terms may be necessary if more companies are to take part in future bids.

Meanwhile, the joint venture between subsidiaries of state-backed developers China Merchants Land, China Resources Land (Overseas), China Overseas Land & Investment and CTG Investment, mainland e-commerce giant JD.com and Hong Kong developer Sino Land is a blueprint for the future.

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