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    Chapter 8: Defining Our Needs

    Section II Planning Vision and Future Challenges

  • Defining Our Needs

  • Section II Planning Vision and Future Challenges

    8Defining Our Needs “Necessity never made a good bargain.”

    – Benjamin Franklin

    8.1 Reference Scenario

    8.1.1 The Reference Scenario describes the circumstances under which we formulate our planning strategy. It attempts to translate our long-term vision for Hong Kong into a set of working assumptions and define some of our social, environmental and economic needs in more concrete and, where possible, quantitative terms. It highlights those factors which need to be taken on board in the consideration of a most appropriate spatial development pattern for Hong Kong and in conducting various impact assessments on this pattern.

    8.1.2 In the previous chapter, it has been noted that C&SD makes official population projections from time to time. However, these projections have largely been made on the basis of past trends and prevailing policies, although they are updated regularly to reflect latest changes. For the purpose of long-term planning, we need to be more anticipatory of changes and pro-active in defining our future. Nevertheless, owing to the complexity of issues, resultant scenarios could be numerous. We need to define a Reference Scenario which is not only what we aspire to, but one that is plausible and achievable. On the other hand, in view of the high level of uncertainty about the future, the assumptions adopted could only be regarded as our “best guess” at this stage.

    8.2 Population and Employment Assumptions

    8.2.1 The population and employment assumptions of the Reference Scenario are as follows:

    • Population will continue to grow albeit at a slower rate of about 0.7% per annum, mainly due to migration from the Mainland. The ageing phenomenon will become more prominent due to


  • Section II Planning Vision and Future Challenges

    Defining Our Needs8 Defining Our Needs persistently low birth rates and longer life expectancy. These assumptions are similar to those of the official projections prepared by C&SD.

    • In line with our vision for growth towards a knowledge-based economy, we have assumed a higher intake of talent/skilled workers and investors in the long term (about 10,000 per annum from 2021 onwards, on top of that assumed under the official projections1);

    • A steady rate of economic growth (annual GDP growth at 4.0% initially and gradually falling to 3.0%) is assumed, with faster growth in key industries;

    • Employment (jobs required) will increase at about 0.6% to 1.2% per annum to support the economic growth;

    • Higher worker participation rates in older/female age groups would be likely, reflecting a more flexible work life, deferred retirement, as well as the increase in women workers who will be more ready to join or remain in the workforce.

    8.2.2 Under these assumptions, the resultant population and employment are shown in the table below:

    1 It is assumed that each year, around 20,000 to 25,000 professionals will come to Hong Kong under the General Employment Policy and the Admission Scheme for Mainland Talent and Professionals.

    2 As the data was largely compiled in 2005 when information on 2004 was not fully available, the Base Year has been taken to be 2003 for the sake of consistency. This applies to all references to the Base Year in this report.


    # Referring to workers who are also Hong Kong Residents. It is assumed that some of the surplus jobs by 2030 will be filled by cross-boundary commuting workers.

    Base 2010 2020 2030 Year2

    Resident Population 6.8 7.2 7.8 8.4 Working Population# 3.2 3.6 3.8 3.9 Employment 3.0 3.5 3.7 4.0 (million)

  • Defining Our Needs

    Section II Planning Vision and Future Challenges

    8Defining Our Needs 8.3 Housing Land Requirement

    8.3.1 To meet the needs of a growing population, one of the objectives of the HK2030 Study is to ensure timely provision of adequate land and infrastructure for the development of housing and community facilities. An assessment of the future housing demand is therefore needed to serve as a basis for the formulation of our planning strategy.

    8.3.2 It is generally accepted that housing demand is governed by such factors as economic performance, affordability and investment incentives. However, for the purpose of assessing long-term housing demand, we can assume that every household would be adequately housed, and therefore the total housing requirement would be broadly in line with household formation.

    8.3.3 In the period between the Base Year and 2030, a total housing requirement of about 924,000 units (averaging about 34,000 per year) is assumed.

    8.4 Economic Land Requirement

    8.4.1 To ensure economic growth in the long run, a flexible land provision mechanism would be the key. Therefore a new and simplified land use typology has been developed to allow flexibility in the assessment of future land requirements, corresponding with the characteristics of modern economic activities.

    8.4.2 This new land use typology re-categorises market-driven “employment use” land into three broad categories: (i) CBD Grade A Offices, (ii) General Business and (iii) Special Industries.


    Base 2010 2020 2030 Year Housing Stock 2,394 2,642 2,948 3,319 Accumulative

    - 248 553 924 Requirement (thousand units)

  • Section II Planning Vision and Future Challenges

    Defining Our Needs8 Defining Our Needs 8.4.3 An econometric model was established to assess future floorspace

    demand for these market-driven employment uses. It takes into account the floorspace demand of individual economic uses as well as a number of “independent variables” including Hong Kong and Guangdong’s GDP growth, as well as Hong Kong’s population and employment parameters.

    8.4.4 The model has assumed that Hong Kong will continue with its restructuring of the industrial and service sectors while embarking on a much closer economic relationship with the Mainland. A higher level of productivity and enhancement in worker skills have also been assumed.

    8.4.5 It is projected that the total employment-related floorspace demand up to 2030 will be around 10.5 million m2 in GFA. Taking into account the existing surplus stock and the need to accommodate a “natural vacancy”3, the total requirement will amount to about 11.0 million m2 in GFA.

    CBD Grade A Offices

    8.4.6 “CBD Grade A Office” has been identified for separate reservation because of the particular requirements of location and quality of premises, as well as the value and status associated with high-value-added business activities. It is

    difficult to delineate the CBD, but for the purpose of calculation and presentation of data in this study, the key office districts of Central, Wan Chai, Causeway Bay, Sheung Wan and Tsim Sha Tsui are taken as the CBD.

    3 “Natural Vacancy” refers to a level of vacancy that is normally present in the property market. While the level would constantly vary, a 10% rate has been assumed here, based on the average vacancy level for Grade A offices located at Core Districts in the period between 1999 and 2003, as recorded by the Ratings and Valuation Department.


  • Defining Our Needs

    Section II Planning Vision and Future Challenges

    8Defining Our Needs 8.4.7 During the past decade, Grade A offices in the CBD took up about

    8.6% to 10.3% of total floorspace demand. Considering the effects of economic restructuring, CBD Grade A offices are estimated to take up approximately 13% of all employment floorspace by 2030.

    General Business Uses

    8.4.8 “General Business” land use covers private offices (excluding CBD Grade A offices), industrial/office uses, flatted factories and private storages. According to an earlier user survey4, some 80% of the floorspace of the private offices and the industrial/office uses are occupied by three types of commercial activities, with import/export and wholesale trade being the highest floorspace occupier of both private offices and multi-storey factory buildings.

    8.4.9 While conventional manufacturing uses are expected to continue to decline, the implementation of CEPA may result in a slightly slower rate of decline. On the other hand, continued growth in the trade and logistics sector, as well as services and businesses which are less location-bound, will help maintain a substantial demand for general business accommodation. It is estimated that general business uses will take up approximately 74% of all employment floorspace by 2030.

    Special Industries

    8.4.10 “Special Industries” refer to land uses with particular accommodation requirements. This kind of land use will not necessarily be polluting but may require sites suitable for capital and/or technology intensive industrial operations which may have special infrastructural and/or locational requirements, and/or where special treatment, security, or other measures have to be taken. For this reason, it would be appropriate to delineate distinct zones for such uses to separate them from other uses. The layout of such special industrial zones would also need to


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