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Land Injustice and the

Umbrella Movement

by Edward CY Yiu Associate Director, IOFC

Associate Professor, GRM, Chinese University of Hong Kong

Urban Lab+ Public Lecture @ CUHK

16 December 2014

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Urban Problems • Unaffordable Housing; • Subdivided Flats and Coffin Rooms; • Walled City; • Dilapidated Buildings; and • Income Inequality.

Housing Price to Income Ratio:

HK 2013 = 13.5, HK 2014 = 14.9

Severely Unaffordable Housing

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Income Cannot Catch Housing Price

• From 2010 to 2013 – Inflation rate increased 20%; – Housing Rent increased 40%; – Housing Price increased 80%.

Sub-divided Flats

• A Walled City

Country/ city

GDP per Capita

Ave. Living

Area (sf)

Per Person

(sf)

US 51,704 2,476 ~800

Taiwan 38,357 1,119 ~370

SIN 60,799 1,044 323

Tokyo 35,855 667 ~220

Shanghai 9,055 560 194

HK 50,936 452 161

High Density, Small Space

Per Person Living Space of HK is ½ of SIN

URban Population

Density of HK is 3 times

higher than SIN

Density Affects Livability

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Overall

Population

Density

• 6,000 blocks (20%) of old building built before 1964

Dilapidated Housing

Income Inequality

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City / Country Rank Gini

Hong Kong Asia Highest 2012 0.537

Singapore 0.478

Norway Global Lowest 0.256

http://www.insitu.com.hk/blog/wp-

content/uploads/2011/12/IncomeInequality_HK.jpg

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The Most Expensive Apartment in the World

• The Opus

• Frank Gehry-designed;

• 6,683 square feet;

• HK$455 million in 2012;

• i.e. HK$68,000 psf. (US$8,700 psf)

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The Second Most Expensive Luxury Housing in the World

La

nd

Inju

stic

e

Monopoly

Money Supply

Land Supply

Housing Supply

PPP

Government’s Role

Money Supply

• Linked Ex Rate

• Negative Real Interest Rate Pushes Up Housing Price

Land Supply

• Leasehold

• Limited Supply

• High Land Price Policy

• 30% Govt Income from Land

Infrastructure Supply

• Funded by Land Sale

• Or PPP

Housing

Supply

• Private Housing

Oligopoly

• Public Housing

Funded by PPP

Leasehold

Land Interests

• 99.9% of land in

Hong Kong are

owned by the

government;

• Granted by land

leases for 50, 75, 90

or 999 years;

• Disposed by

auctions, tenders or

private treaty grants.

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Restrictive Land Supply

• Peng, R. and Wheaton, W.C. (1994) Effects of Restrictive Land Supply on Housing in Hong Kong: An Econometric Analysis, JHR 5(2), 263-291.

– “When restrictions lead to an anticipated reduction in overall land supply, the housing market (correctly) expects higher future housing rents, … capitalized into higher current housing prices.”

Land (for all uses)

Private Housing Units to be built

Bef 1997 < 50 ha Ave. 26,000

2011/12 36.8 ha 9,450

2012/13 30.2 ha 10,150

2013/14 25.8 ha 8,750

Target - 20,000

Restrictive Land Supply

Existing Land Use Distribution & Government Vacant Land

Zoning Land Area (ha)

Government Vacant Land

(ha)

%

Residential 9,759.5 2,153.7 22%

Commercial 803.1 24.6 3%

Industrial 1,478.9 298.3 20%

GIC 3,676.7 777.7 21%

Recreation 2,587.4 742.9 29%

Total 58,989.5 3,997.2 7%

Land Use Area HK 2000 Use Col

or

R

I/C

G

AGR

GIC

Reservoir

Sea

http://www.pland.gov.hk/pland_en/p_study/comp_s/lup/index_e.h

tm

Brownfields

Land Use Distribution HK 2012

Use %

R 6.9%

I/C 2.7%

G 66.6%

AGR 6.1%

GIC/O 4.5%

http://www.pland.gov.hk/pland_en/info_serv/statistic/landu.html

~800ha AGR land are

Brownfields

Brownfields HK

"brownfield sites" cover many different land uses, such as port back-up land,

deserted or damaged agricultural land, industrial uses like workshops,

recycling yards, open storage facilities, etc..

Regimes Consequences Problems

Planning Control

No Democracy

Town Planning Board members are all

appointed by Chief Executive

Top down approach, and no monitoring

system

Lease Control

Land Premium is Negotiable

Government becomes an investor and profit

oriented

Building Control

Prescriptive Code Rigid but can be waived by Authority’s

Discretions

Env. Control Decision makers are government officials

Top down approach

Development Controls

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Collusions

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PPP

• Govt granted the site free to

the tenderer in 1984;

• Developer built the

exhibition centre at her own

cost;

• But in return she took 2

world class hotels, an office

tower and a serviced

apartment tower at no land

cost.

• A Win-Win situation?

•How to build an Exhibition

Centre at NO COST!

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BOT / BOOT

• Build, Operate, Transfer (BOT)

• A project of BOT in 1989;

• Govt granted a franchise to the tenderer for 25 years;

• Contractor built and operates the tunnel, gets the tolls;

• Government does not require any investment, but defer the ownership.

• A Free Lunch? – High Toll

•How to build a tunnel at

NO COST!

PPP: Cyberport (and Bel Air)

No Tender

Land was granted to a developer as the govt’s equity contribution

The joint venturer's capital contribution is estimated at $7 billion.

Government Share of the Profit is about $4 b

PPP Funds Public Housing

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Types Public Rental Housing

(Rent PRH)

Subsidized Housing (Sell HOS)

Accom. 30% households 17% households

Subsidy Lower than market rent Waiving part of land premium

Const cost $2,000 $2,000

Price NA $7,000 psf say

Net Surplus NA $5,000

PPP Sell 1 HOS can finance 2.5 PRH

Public Infrastructure Exp.

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116% up

31% up

Govt Land Sale Revenue Govt Infrastructure Exp

Revolving Door

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• Higher Land Price

More Land Sale

• Attract More People

More Infrastructure

Monopoly PPP

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Umbrella Movement

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• The Chief Executive, is currently

selected by a 1,200-member

Election Committee, most of them

are businessmen.

• Article 45 of the Basic Law states

that “the ultimate aim is the

selection of the Chief Executive by

universal suffrage upon nomination

by a broadly representative

nominating committee in

accordance with democratic

procedures.

• But it has been waiting for 17

years, until Sep 2014 when …

Sep 28, 2014

Umbrella Movement

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• On 31 August 2014, the National

People’s Congress set limits for

the election.

• The decision states that for the

2017 Chief Executive election, a

nominating committee, mirroring

the present 1200-member Election

Committee be formed to nominate

two to three candidates, …

• An election without nomination

rights

• A protest was then held at the Govt

HQs at Admiralty.

Sep 29, 2014

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The End

comments are welcome. Enquiries to:

ecyyiu@cuhk.edu.hk