Unleashing Development Potential in Hong Kong’s Rural Areas

Hong Kong SAR¹ is often perceived to be an overly crowded city, yet there is still plenty of room for urbanisation in the New Territories.

Huge potential could be released by turning the agricultural lots and brownfield sites in the New Territories into housing and business land supplies in the medium to long term.

Concentration of economical activities around the Harbour

The economic activities and habitation mass in Hong Kong have long been in focus along both sides of the Victoria Harbour.

The Harbour Metropolis, with Central as its core, has provided most of the employment opportunities in the city. According to a 2021 study by the Planning Department of the HKSAR Government, total built-up area accounts for about 25% of the total land area of 1,114 sq km of the territory. The population density in built-up areas in Kowloon and Hong Kong Island North is 2.26 times and 1.98 times that of the overall density for the whole territory, respectively.

People are often amazed when they take a closer look at the developments on both sides of Shenzhen River. On the northern side of the river, we see arrays of mixed-age building blocks in Futian and Lo Wu of Shenzhen. On its opposite side, we see vast undeveloped farmlands, fish ponds, wetlands, woodlands and brownfield land in New Territories North of Hong Kong.

Tapping into the holistic development of the region

Urbanisation is deeply associated with economic and population growth, along with the generation of more business and economic opportunities as it progresses.

Shenzhen set a marvelous example of urbanisation and industrialisation, and further transformation into the Silicon Valley of China in just 40 years. It experienced a 150% growth in population and 11.6 times growth in GDP from 2000 to 2020, while Hong Kong had a 11% growth in population and a doubled GDP in the same 20-year period.

For Hong Kong to grow the economy and tap into new opportunities in the region, especially in the Greater Bay Area comprising nine cities and two special administrative regions in southern China, the Hong Kong Government has identified the need for adequate land supply at strategic locations for different economic activities and housing needs.

It is intended that a Northern Economic Belt would be established in Hong Kong.

New Development Areas in New Territories

A Northern Metropolis Development Strategy was further formulated in October 2021.

The Development Strategy proposes to expand the Northern Economic Belt to cover new towns in Yuen Long, Tin Shui Wai, Fanling/Sheung Shui, various New Development Areas and development nodes, as well as their neighboring rural areas, and to consolidate the above into a holistic metropolis with a total area of 30,000 hectares.

Further Development Proposals in Northern Metropolis

Development of housing, business and logistic nodes

The development of these areas and their surrounding rural areas will mean redevelopment and resumption of substantial extents in the coming decades.

In Hong Kong, private developers can take part and contribute to the redevelopment of rural agricultural land and brownfields through land exchange applications to the Lands Department of the HKSAR Government. Owners of land planned for future housing or commercial development can apply to the Lands Department for surrender of their own agricultural lots or degraded industrial or open storage sites for regrant of lots, which permit residential, commercial and/or other development.

Apart from developers, a notable portion of rural land in the New Territories is held by traditional family/clan landholding organisations known as Tso or Tong. This land could be sold to private developers with the Government's consent and subject to relevant procedures, including unanimous consent from all Tso/Tong members.

Private market forces will play a prominent role in the massive conversion of these new development areas in the New Territories.

In the financial year of 2021/2022, land exchange and lease modification cases contributed to more than 57% of the total number of private flat supply (a total of 11,390 units) in Hong Kong, amongst other sources including government land sale, sites awarded by the Urban Renewal Authority and railway-top projects from MTR Corporation Limited.

Making better use of private market forces

To implement the formulated New Territories development strategies, the Government must continue to explore measures which could facilitate and make better use of private market forces.

Practices such as standardising or reducing land premiums for land exchange of agricultural lots and brownfield sites, granting early approval on land exchange in the New Development Areas, encouraging private-public sector schemes and reviewing Tso/Tong land sale arrangements will be invaluable for expediting land supply. Review on the procedures and compensation payment for resumption of land in the New Territories is also of paramount importance.

The Development Bureau has just announced enhancements to the compensation arrangements for landowners and business operators affected by land resumption and clearance projects of the Government in early May 2022. Formulation of more measures facilitating the development of rural land by the Government will likely be seen.

¹Special Administrative Region [of the People's Republic of China]

Liked what you read? Subscribe to our mailing list or check out these articles you may also be interested in:

• Enhancing your hotel: Sustainability, growth and financing
• Property segments remain strong as 2021 nears its end
• Through the looking glass: What's in store for RevPAR in Asia?

---

Article enquiries

Contact us here.