The land regulations in Hong Kong are famously strict and complex, which can significantly discourage development efforts and impede advancement. This red tape is counterproductive for a contemporary city facing constrained land availability yet an increasing demand for major projects.
Although the authorities acknowledge the issues and have occasionally attempted to alleviate constraints through incremental steps, the speed at which plans and developments are advancing frequently falls short.
As an additional measure to streamline procedures, developers will now have permission to alter leases and pay a land premium under the “pay-for-what-you-build” principle.
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Rather than charging for the highest permissible building area according to the current rules, the fee will now depend on the real size of the construction project.
Separately, short-term tenancies, under which government land can be leased for fixed terms of up to seven years, also may be granted a longer period to encourage more long-term planning and diversified land uses.
This flexibility is appreciated as it reduces initial expenses and accelerates individual project developments. Additionally, it promotes various kinds of land use based on specific requirements.
The relaxation of land-use regulations comes at an opportune moment as officials advance plans for the Northern Metropolis, a prominent mega-project aimed at developing 30,000 hectares of land in the New Territories close to the Chinese border into a major commercial and residential center.
Both Beijing and the Hong Kong administration hold great expectations for this metropolitan area to emerge as a key driver of economic expansion locally and regionally. A positive indicator is that at least 22 firms from Hong Kong and Mainland China have shown keen interest in participating in a trial initiative aimed at developing extensive plots of land within the project.
The reduced economic barrier for business initiatives will act as a spur for faster progress. Ideally, this will also whet investors' interest and generate additional income for financially strained government treasuries.
There are increasing worries that the slow-moving real estate sector has significantly weakened growth motivations, leading to a worsening of the government's fiscal shortfall over the past few years.
These shortcomings not only affect numerous capital-intensive initiatives significantly but also pose long-term challenges for financial discipline and stability. Authorities ought to investigate additional strategies to fully utilize the city’s land assets.
This involves simplifying regulations and processes to accelerate both planning and building efforts. The city aims to avoid hindering innovative developments due to narrow-minded bureaucratic obstacles.
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The article initially appeared on the South China Morning Post (www.scmp.com), which is the premier source for news coverage of China and Asia.
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