Page 3 - LanHse_exec_summ_Part2_eng

1. An almost standstill in reclamation

Reclamation has been one of our main source of new land. Among
the new developed land over the past two decades, it is estimated that
over 40% of them were created through reclamation. Yet, reclamation has
greatly slowed down or even come to a halt in the last decade.

2. Red tapes in approval procedures

(i) Comprehensive Development Area (CDA)

All proposed CDA developments must be submitted to the Town
Planning Board (TPB) for approval to facilitate comprehensive development.
Nevertheless, it is often difficult to integrate dispersed ownership in
the CDA sites. Adding that such consideration is not fully based on any
objective criteria, a number of CDA development projects have suffered
significant delays. Presently, there are at least over 200 hectares of CDA
sites pending approval, involving over 68 million sf of developable floor
area.

(ii) Procedure of examination by the Government

The approval of all development projects in Hong Kong are under
the purview of three Government departments: Planning Department,
Lands Department and Buildings Department. Nevertheless, while parts
of the approval areas of these three departments are overlapped, these
departments may not share a common set of technical definitions of the
items to be approved. Moreover, the approval process involves consulting
other government departments. The communications and requests
amongst departments constitute one of the causes of delays.

Furthermore, the calculation mechanism of land premium in
lease modification and land exchange transactions is not sufficiently
transparent, and may not be able to reflect the latest market situations
and trends of specific parameters. This discourages the interested
developers, and thereby slows down development. In fact, the number
of lease modification and land exchange transactions have decreased
significantly in the recent years.

III. More Macro Considerations about

Land Development

Land development is far more than just finding sufficient land to
accommodate new buildings because extra “room-making” is also
required for the decanting of residents or facilities when redeveloping or
moving old buildings. Hence, “natural vacancy” should always be taken
into consideration when determining future land demand. Also, in order
to provide sufficient facilities and employment opportunities around the
residential area, the plot of land in question cannot be too small.

Even if Hong Kong’s population does not grow in the future, if we hope
to raise the average developed land area per person by 40%, we need an
extra 5,800 hectares of land, which is equivalent to two Tai Po New Towns.
Furthermore, in 30 years Hong Kong’s population is projected to reach 8.22
million. Based on this projection, we will need more than 9,000 hectares of
land, which exceeds three Sha Tin New Towns.

46