HTMG3041A

Law for Hospitality and Real Estate Industry

Group Project

TOPIC 9

How can Hong Kong increase its land supply and what are the pros and
cons of all these methods? Discuss the legal aspects of such methods.

Group 2

Chan Tsz Lam Minnie 1155106782

Chu Yi Chuan Icole 1155098084
Lee Chun Hei James 1155109814
Man Heather 1155109399
Yip Tsun Hang Gavin 1155103918

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 Land Supply Issue in Hong Kong
Chan Tsz Lam Minnie

Land is a critical resource for a city’s development. However, Hong Kong is limited with
build-up area of only about 270 kilometer square housing and is incorporated with a population
of about 7.4 million (Legislative Council Brief, 2019).

According to a report from Task Force on Land Supply (TFLS), the land requirement over the
next 30 years will be no less than 4,800 hectares (ha) (Public Engagement of the Task Force on
Land Supply, 2018a). However, from the committed and planned development, the planned
land supply in the coming 30 years is about 3,600 ha. The figures reflect that Hong Kong is
facing a land shortfall of 1,200 ha in total. This shortfall will exist up to 2046. Based on the
public engagement exercise, which includes an estimation of Hong Kong land use in the
upcoming 30 years, the actual demand of land is way higher than the proposed and the
estimated land supply. With reference to this exercise estimation, there is a result has been
discovered. Within the 1,200 ha shortfall, the estimated shortfall of about 800 ha will exist up
to 2026, categorized as a short-to-medium-term projection; while the remaining 400 ha of
shortfall is categorized as a medium-to-long-term projection from 2026 to 2046.

Regarding the land shortfall estimation and it has shown a long term influence on Hong Kong
land supply issues. TFLS examined over 20 land supply options, some of which already
implemented by the government. The government, too, agreed there is an emerging need for a
more vision-driven land supply policy to lead the land supply in Hong Kong, in order to deliver
sufficient land for the future development of Hong Kong. The HKSAR government has
conducted a survey in the community, and 85% of the respondents, looking for a better living
environment, support the idea of land reserves (Zhao, 2018).

In addition, the land shortage problem has also brought about social issues, and the land supply
issue should be addressed without delays. There are several means to alleviate land shortages
in the short term, for example, the government can tap damaged agricultural land or brownfield
sites (~760 ha) into any development plans, or collaborate with private developers to develop
the farmlands in the New Territories. In reality, the government has planned to release space in
some of the 95 recreational facilities, such as the Tuen Mun Recreation and Sports Centre
(Zhao, 2018). Moreover, there are six other options, including land reclamations of 400 ha,
artificial island developments in Lantau east of around 1,000 ha, and land expansions on a
container terminal in Tuen Mun of 65 ha, which potentially provide relevant lands after 10 to
20 years.

Since Hong Kong has the most extravagant housing costs in the world, one of the most
pressing economic issues here is the scarcity of affordable housing, let alone its public housing

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waiting list being so long that the waiting time has been extended to 5 years or more. Such that
by developing new land, the Hong Kong government targeted to build 280,000 new public flats
over the coming ten years. The HKSAR noticed that the land shortage problem was urgent and
have executed different measures suggested by TFLS. In terms of the legal perspective, every
single measure may encounter obstacles or challenges. In the below sections, we will analyze
three kinds of methods including “better use of vacant school premises (VSPs), Sites under
Short-Term Tenancy (STT) and Sites under Temporary Government Land Allocation (TGLA).

Method 1: Better Use of Vacant School Premises (VSPs)

Man Heather

In line with the principle of ‘best use of land’, the government has established a Central
Clearing House Mechanism to ensure that vacant school premises (VSPs) can be used for
suitable long-term land uses (Task Force On Land Supply 2018c). According to the
mechanism, when the Education Bureau determines that individual VSPs no longer need to be
reallocated by the Bureau for school or other educational purposes, the Education Bureau will
notify the Planning Department and other relevant departments (e.g. Transport Department,
Environmental Protection Department and Home Affairs Office). Thereafter, the Planning
Department will conduct a review and come up with a series of plans. With thorough
evaluations of factors including the intention of the planned use of land, the general land uses
in its surrounding, the environment, and the opinions of relevant departments etc, the relevant
VSP will be proposed for applicable long-term land use options, and the land use zoning will
be considered in a concentrated manner, such as for government, institutions, community,
housing or other categories. Upon determination, the Planning Department will send the final
decision to its management, such as the Lands Department (for VSPs on government lands)
and the Housing Department (for VSPs in public housing estates), for proper follow-up. The
determination of the long-term development plan for the VSPs usually takes some time, thus
during the period, relevant departments will identify and assign the land accordingly for
temporary or short-term uses. Typically, the Lands Department will spread the information
about VSPs on the internet especially to the NGOs so that the land can be applied for
community, institutions and non-profit uses in a short-term manner(GovHK, 2017b).

To date, the Planning Department has conducted a review of long-term land use for 183 VSPs
in accordance with the Central Allocation Mechanism (Planning Department, 2017). The
suitability of high-density developments for individual VSPs depends on the size, location,
transportation facilities, infrastructures, technical constraints, regional development needs, and
its nearby land uses, etc. The benefits brought about by appropriate uses of VSP sites are
conspicuous.

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The use of vacant school buildings with a well-developed transportation network for temporary
housing has the advantage that basic facilities such as water supply, sewage and fire protection
are in place and will not cause negative impact on the environment. The planning and
construction procedures take three to four years and does not require piling, which is faster
than building a house from scratch at any time. With the use of prefabricated houses, the
process would even be completed within one and a half years. Under the current tight land
resources, the proposition of altering VSPs into transitional houses are, to a certain extent, an
ideal way out. Rebuilding a school premise is always more effective and practical than finding
another land to build a container house, which should help to solve the short-term housing
needs (Ip, 2019).

On the other hand, there are various public-sector schools housed in over 40-year-old
substandard premises. These schools lack basic facilities such as decent assembly halls,
libraries, music rooms, and even proper fire safety installations. The buildings remain shabby
and unfurnished in spite of numerous annual renovations and refurbishments. Though, vacant
schools can be entitled to expansion or reconstruction to solve standardization issue once and
for all. Facilities of the refurbished schools can be opened to the public after school hours,
making venues available for athletic training, district sports activities, Elder Academy
programs or parents education programs, creating a win-win situation (Ip, 2019).

However, of the 183 VSPs reviewed, more than 70% of the land is less than 0.3 hectares, much
of which locating in more remote rural areas, lacking transportation and infrastructure facilities
to cope with high density housing development (including public housing). In the end, only 18
VSPs were qualified as suitable for housing development (Planning Development, 2017). In
addition, the Education Bureau needs to reserve or retain a certain number of VSPs to meet the
projected demand for future sites and make flexible arrangements in response to relevant
uncertainties. The Bureau also has to use VSPs to respond to a variety of constantly changing
demands, including relocation of existing schools to improve the educational environment;
reserving temporary school premises while reconstructing or expanding schools on the same
site (GovHK, 2017a). Therefore, there is in fact a very limited number of sites to apply
different planning and reconstruction ideas to. More importantly, the transformations of land or
facility use are often restrained with many contractual or institutional restrictions to abide to.
Some social welfare facilities have specific site selection or operation requirements, which
reduces VSPs’ feasibility and practicability in making fuller use of land resources.

With respect to legal attributes concerned with the better use of VSPs, the most glaring issue
would be related to the physical possession of vacant school buildings on both government
land and private land not handed over to the government after closure. According to the records
provided by the Education Bureau, some schools had been classified as not suitable for
educational purposes and returned to the Lands Department only after an average of 11.2 years
since closed down (Task Force On Land Supply, 2017). This indicates that the administrative
procedures of collecting VSPs has not been streamlined enough to enable the smooth handing

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over of physical possession rights to the government. The Lands Department decides when to
take action against the vacant premises, so before they do so, the site remains vacant. Besides,
the Lands Department has no right under the relevant land deeds to recover the private land
solely because the school was closed. The development of vacant school buildings that are
partially or completely located on private land will depend on the wishes of the private
landholders, and will take into account the land use zones recommended by the Planning
Department for the site after review. For instance, as requested by the Audit Commission, the
Lands Department reviewed the land leases in September / October 2015. The Commission
was informed that out of the 62 VSPs located on private land which has not been handed over
to the government, only 32 land leases contain termination or reduction clauses that legitimize
the government’s right to retake the land.

Meanwhile, the collection of land sometimes face objection and rejection when the premise
displays historic and monumental value to the neighbourhood. The worst case is when the
request of the Lands Department is simply ignored, in which there could be no respective
follow-up made promptly, further hindering the process.

Confusion and disputes may derive when land clauses are missing in the service contract. It is
the policy of the Education Bureau that when a school is reallocated, the school sponsoring
body should return the existing school building, and the standard terms of the service contract
must include the return of land clause. In August 2015, in response to the Audit Commission's
inquiry, the Education Bureau stated that it could not find any records showing why the land
restitution clause was not added in a case. Audit considers that the Education Bureau should
strengthen supervision and exercise greater care in preparing service contracts to prevent future
omission of land provisions (Audit Commission, 2015).

Method 2: Sites under Short-Term Tenancy (STT)

Yip Tsun Hang Gavin

With land scarcity being such a prominent problem for Hong Kong, the government can
consider engaging in external organizations where it uses government lands which are yet
required for long term development into temporary short term use. By engaging in this
Short-Term Tenancy (STT) method, it helps to convert unused land into more essential social
needs, including parks, gardens, playgrounds and even residential uses for the citizens of Hong
Kong. This is then handed over to the Hong Kong Land developers which helps the
government to achieve its goal of increasing the land supply available in this city. In other
words, these STTs are in fact issued as a transitional arrangement to enable works to
commence for implementation of the long-term development uses of the sites. Most of these

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sites will eventually become part of the infrastructure concerned (LCQ18: Temporary
government land allocations and short-term tenancies, 2019).

As of September 2017, there are approximately 5,300 STTs with a total area of 2,450 ha made
available across Hong Kong (Task Force on Land Supply, 2018b). With the bulk of this land
supplied for public works including the building of the Airport Three-Runway System (1,640
ha) and others for commercial (282ha) and non-profit community uses (205ha). From the
theory aspects of this method, when the Hong Kong government engages in STTs, it is
extremely beneficial in the short term as it helps to avoid any available land in Hong Kong
becoming idle, allowing the city to reap the maximum benefits possible. These STT sites are
made available across Hong Kong including Kowloon and the New Territories, and it comes
with different roles such as public car-parks, plantations and storage spaces. Finally, on the
theory aspect of STT, it was also meant to create an easier task for the government when it
decides to recollect these sites when the government has found new plans for future
developments. The Kwai Tsing Container Terminal (KTCTs) is an example of STT which is
later recollected, where a total of nine terminals making up of 24 ocean berths, a total of 279 ha
of land was recollected, allowing the Hong Kong government for modernization and upgrades
of that site.

However, with every method there is often a huge difference between its theory and its
practical aspect. From the legal aspects, STTs do not seem to increase the land supply or solve
the land scarcity issue in Hong Kong, as this method only provides land which has a small
surface area of less than 500 square meters in size and are mainly situated in rural areas.
Among these sites, most of them are zoned as conservative areas, rendering them unsuitable for
independent developments (Task Force On Land Supply, 2018b). Furthermore, when the
government states that a certain land becomes an STT, it is often situated with some sort of
illegal operations, particularly those in the New Territories (Task Force on Land Supply,
2018b). These illegal operations include private landowners extending their operational
boundaries, including their car park businesses or container storage spaces into government
sites which are meant for STT. When the external organizations reach the location for site
visits, they find themselves engaged in disputes and need to pay additional cost just so that
these landowners will move their operations back into their designated boundaries. To solve
these disputes peacefully, lawmakers are often seen colluding with the rural leaders who are
illegally occupying STT sites for their own businesses. From the legal perspective, to reduce
misconceptions and any unnecessary conflicts, there are many under-the-table dealings which
are illegal in Hong Kong. Another negative upbringing of using STT in the topic of land supply
is that there is often a really high cost associated to this method. Not only does it require high
financial support for reallocation including land resumption and compensation costs, but more
importantly, the time needed to make these reallocations a success is often way too long due to
uncooperative owners and strict requirements for in-depth research, large-scale planning and
implementation for the replacement sites. Like the KTCT project, before the government

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decides to recollect the sites, they must first find an alternative to meet the industry’s needs.
Often, this is associated with huge efforts and investments to ensure that with this recollection
of STT, the daily operations are not hindered.

Although Short-Term Tenancy does bring about benefits in the short run as it creates
opportunities and maximizes all governmental land to become effectively used, in the
long-term there are many legal loopholes particularly with the huge mismatch between its
theoretical and practical aspects. In addition, for the government to effectively increase land
supply in Hong Kong through embracing STT, they must first ensure the loopholes of this
method are dealt with before adopting it to tackle the issue on hand, while keeping in mind that
not all land allocated by STT are suitable for high-density development.

Method 3: Sites under Temporary Government Land Allocation (TGLA)

Lee Chun Hei James

Temporary Government Land Allocation (TGLA) is similar to STT but with a different
allocation target. Under this mechanism, governmental lands that is not yet in use is utilised by
having it temporarily allocated to government bodies (​GovHK, 2018​). The typical uses of the
sites include storage, construction, schooling, training, and helicopter landing (​Task Force on
Land Supply, 2018a​).

The number of TGLAs allocated to the government bureaux for the executions of government
projects and services is 4040 as at February 2019, and a total area of around 3 633 hectares (ha)
is involved (​Lands Department, 2019​). Among all TGLAs, construction sites are the major use
of the land allocated to governmental departments (​Task Force on Land Supply, 2018a​).
Efficiency is achieved because the land for construction is normally not returned to the
government upon expiry but become part of the future infrastructure, despite the temporary
basis of TGLA (​Task Force on Land Supply, 2017​). The most recent constructions having
TGLA involved includes Shatin to Central Link project, the Hong Kong Link of the Hong
Kong-Zhuhai-Macao Bridge, and the Hong Kong section of the Guangzhou-Shenzhen-Hong
Kong Express Rail Link (GovHK, 2018).

However, the usability of a piece of land depends highly on its physical feature. A parcel of
highly usable land should be in a large size, proximate to other vacant unallocated lands, and
most importantly, be located in an urban area (Ng, 2018). More than 860 government land with
a total area of 100 ha are left vacant as at January 2018 (​Task Force on Land Supply, 2018a​).
These lands are not put in productive use due to their physical or technical limitation. Among
the unallocated government land, nearly 60% have an area of not more than 500 sqm (​Task
Force on Land Supply, 2018a​). Although the remaining 40% have larger areas from 500 to

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10000 square meters, they remain vacant due to other physical constraints. Another common
problem is that lands in remote areas without adequate ancillary transport facilities are also
considered counterproductive.

Another issue with TGLA is the lack of monitoring mechanism on the land use. Any
unauthorized occupation of the land would interrupt the determined land use in the long run.
According to Liber Research Community (2018b), some government bodies do not return the
land, which was temporary allocated to them, for many years. To illustrate, a parcel of land
with size of 2.35 ha near the Island entrance of Eastern Harbour Crossing was temporarily
allocated to 3 government departments as a temporary vehicle centre in 1995. Upon expiry, the
land was planned to be re-allocated to the Leisure and Cultural Services Department to execute
the development of Quarry Bay Park Phase II. However, only the Water Supplies Department
agreed to return the land. Currently, the land is still occupied by the Hong Kong Police Force
and the Food and Environmental Hygiene Department (​Liber Research Community, 2018a​).
The only response from Lands Department was to remind the government departments to
monitor the status of land use and occupation, and to return the land when it is no longer
needed (​Lands Department, 2014​). Due to the lack of sound monitoring system, a 20-year
delay was therefore caused to the planned land development by the unauthorized occupation of
certain government departments.

Conclusion
Chu Yi Chuan Icole

Shortage of lands in Hong Kong is a well-known though intractable issue since decades ago.
Despite its urgency, it is identified that additional land sources are almost implausible to find.
Currently, the relevant options target VSPs (Vacant School Premises), STTs (Short-term
Tenancy) and TGLAs (Temporary Government Land Allocations). The essence of the above
approaches is to use the lands in the most effective way. However, to milk the value to the
ultimate extent, adversities are inevitable. In views of legal perspectives, the official operations
and its virtuous intentions are more often than not corrupted by the fairness of the law, where
tenants and land occupiers refuse to leave the site, object to return the rights or even conduct
illegal activities. On top of that, it is undoubtedly a considerable amount of work to review
vacant or unused lands, and to find adequate tenants or developers under bureaucracy and its
enormous legal system. In short, the current approaches of VSPs, STTs and TGLAs have
become the societal basis of effective land uses. The future aim of the government should be in
the direction of the advanced development of standard operating procedures, in assist of
keeping land uses legal and efficient. It might not completely terminate the trouble making
factors, but it certainly alleviates the issues to a certain extent.

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Premises]. Retrieved from ​https://www.aud.gov.hk/pdf_ca/c65ch03.pdf

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