MASSEY UNIVERSITY PROPERTY FOUNDATION LAUNCH, AUCKLAND Synergizing Property and Infrastructure Development: Hong Kong Experiences Prof. Bo-sin TANG Department of Urban Planning and Design The University of Hong Kong 4 October 2018
What is well known about Hong Kong?
Key Points: Hong Kong Rugby Sevens Expensive and Unaffordable Housing Hong Kong ranked world s most expensive housing market for 8 th consecutive year
Global Housing Indexes Source: https://www.economist.com/graphic-detail/2018/08/09/global-cities-house-price-index
Ultra High-Density City British Colony (1841 Jun 1997) China s Special Administrative Region (since 1 July 1997) Total area: 1,104 sq.km. Population: 7.41 million Density: 6,700 persons/sq.km. Source: HKSAR Government
24% of territory is urban/built-up land Source: Planning Department
40% of territory is Country Park Source: Hong Kong SAR Government
Financial & Business Services Hub 4 th world s largest forex trading centre 4 th largest stock market (in Asia) 6 th world s largest banking centre 7 th world s largest trading entity 11 th largest exporter of services(2017) Four Pillars: Proportion of GDP 2016 2000 Trade and logistics 21.6 23.6 Financial services 17.7 12.8 Professional and other supporting services 12.5 10.6 Tourism service 4.7 2.4 Source: Census and Statistics Department
Efficient (and Harmonious) City
Public Transit Dominated Rail 49.1% Buses 34.9% Minibus 13.7% Others 2.3% Source: MRTC 2017 Annual Report
Rail Transit-oriented Development Land Use Source Planning Department Floorspace within 500m of MTR Station Commercial/Office 75% Industrial/Storage 46% Others 46% Residential 43%
Rail + Property (R+P) Development Model, Hong Kong
Funding Gaps Capex: High capital cost to build railway Opex: Government subsidizes railway fares Picture source: World Bank. (2013). Planning, connecting, and financing cities now: priorities for city leaders. Washington D.C.: World Bank, p. 30.
Value Capture Railway alone has extremely low yield. How to capture the benefits on real estate generated from improved accessibility. MTRC: Contribution to Operating Profits, 1998-2006 ROI to Railway Corporations in Metro Tokyo: 1980-1996 Data source: MTR Annual Reports. Source: Cervero, R. (2008). Sustainable Transit Finance & Urbanism, Presentation at MTR Seminar on Sustainable and Integrated Planning for Railway, Hong Kong, 25 Nov 2008.
A Profit-Making Business Data sources: MTRC Annual Report 2017
Financial Returns to HK Government Government set up MTRC in 1975 Public listing in 2000 Government remains as a majority shareholder Total values to Government: Land Premium (since 1975) Market Cap (as of 31 Oct 2012 77% shareholding) Cash Dividends (since 2000) HK Dollars ($) 97.9b 135.3b 15.2b IPO Proceeds 10.5b *Excluding increasing land premiums and property rates along metro corridors Less: Govt Capital 32.2b Total * 226.7b Data Source: MTRC
How to explain the success? Source: https://www.routledge.com/routledge-companion-to-real-estate-development/squires-heurkens-peiser/p/book/9781138914346
An Institutional Model Hong Kong Model
R+P Development Project Cases
Source: Ho, T.H.K. (2011). Railway and property model MTR experience. BRE Advanced Lecture Series. The Hong Kong Polytechnic University, 12 April 2011.
Key Points: Government s Land Grant and MTRC s master planning of development nodes Kowloon Station: Land Area: 13.5 hectare; 19 towers accommodating a 118-storey tower of 232,000 sq.m. prime office, a deluxe hotel and observation deck Shopping centre of 82,750 sq.m. ; 6,400 housing flats, 5,600 carparks, PTI Downtown check-in centre, Airport Express Station and local metro station
Kowloon Station
Area: 5.4 ha. Tsing Yi Station Residential: 12 Blocks 245,700 sq.m. 3500 units Commercial: 46,170 sq.m. 920 CPS 4 years
Airport Express Mall Mall Local Line
All-weather Connectivity : Door-to-Mall, Mall-to-Station
Future Challenges
Ageing Population Source: Planning Department, HKSAR
Where to find new land supply? Source: http://www.landsupply.hk/download/pdf/ppt/pe1_pf3_18feb12_consultant_presentation.pdf
Source: https://landforhongkong.hk/en/index.php
Other Issues: Conflicts between development and nature conservation New development areas encounter oppositions Income inequality and social polarization Increasing urban density brings environmental threats Capacity and reliability of strategic infrastructure
Thank you! Prof. Bo-sin TANG Department of Urban Planning and Design The University of Hong Kong bsbstang@hku.hk Acknowledgement: Findings in this presentation come from research projects sponsored by the Hong Kong Research Grants Council (Project No. 717113 and 17202818).