Media

HKU Department of Real Estate and Construction study reveals
generally long delays in Comprehensive Development Area projects
tying up potential private housing units up to several hundred thousands

12 Jan 2016

Professor K.W. Chau, Professor Lawrence W.C. Lai and Professor Stephen N.G. Davies of the HKU Department of Real Estate and Construction, Faculty of Architecture; and Dean of Architecture Chair Professor Chris Webster

A study by the Department of Real Estates and Construction at the University of Hong Kong (HKU) reveals that in the 25 years period between 1990 and 2014, only about 45% of the proposed residential projects within Comprehensive Development Area (CDA) zones actually produced built units. Delays in the development process of CDA projects have withheld from the market about half of the private residential units originally planned. At the extreme the planning application process has lasted 23 years without any project materializing.

The two-year study was funded by a Public Policy Research Grant of the Central Policy Unit.

The research team, led by Professor Lawrence Lai, made use of for analysis publicly available Town Planning Board data, property transaction records kept by the Land Registry, property market statistics released by the Rating and Valuation, and macro- economic data from the Census and Statistics Department.

The team identified a total of 355 projects applied for under CDA zoning from January 1, 1990 until October 31, 2014. Among them, 146 had some form of buildings for domestic use (residential projects).  The rest were for commercial or other uses including open storages. Of the residential projects, only 45%, or 65 projects were ready for occupation by October 2014.  They produced 102,313 actual private housing units, about 50% of all potential new private housing unit supply approved by the Town Planning Board. In other words, almost half of the potential housing supply was locked up in the process as at 2014. The projects ready for occupation took eight years on the average—and as long as 17 years—to complete from the time its first planning application was approved. This average time span is well beyond the three-year building covenant taken as a reasonable measure of development time from the date of execution of the applicable government lease.

Research findings reveal apparent long delays in general in the development process, mainly resulting from repeated applications by developers, many because of minor changes in details in the form of additional facilities and open spaces. Of the 146 residential projects, 80 projects involved more than 10 years from first to last applications, some still having their process going on.

In view of the scarcity of land resources, the situation has been far from satisfactory. While the true reasons behind the lengthy development process are not certain, apart from the repeated applications by developers, the inflexible and stringent statutory requirements for changing or amending the Master Layout Plan (MLP) after the first successful application may also leave much room for improvement. 

For better utilization of land resources, the research team is also of the view that some undeveloped non-residential sites may have the potential for change to residential use. These lands, together with the undeveloped residential sites, occupy a total 446 hectares, which double the size of government’s land sales area in the past nine years. The number of potential private housing units that could be produced is estimated to be high at several hundred thousands.

Summary table of findings

The total number of private residential units completed/with occupation permits (OPs) in Hong Kong was 602,390 from 1990 until 2014: the completed CDA sites are about 17% of the total territorial new residential unit supply.

Major observations by the research team

• For the 65 residential CDA projects with OPs, there has been a reduction in gross site area (GSA) from 278 to 224 ha. The number of units materialized was only 90% of that initially proposed and approved. In explanation, it is possible developers may have adjusted to changing market forces. Some preliminary statistical analysis also showed that built CDA sites generally command a higher value than those of nearby non-CDA projects.
• After getting planning permission in CDA zones, most changes made by the developers in the MLPs following new applications were of minor design significance, which reflected changes in the market conditions more than perceptible planning innovations. (This would likely relate to the avoidance of new technical assessments for major changes)
• The research team found no direct evidence of the deliberate delays or hoarding.
• Research findings show some evidence of lease modifications as a cause of the lengthy development process
• The applications were by and large unaffected by public participation provided by the Town Planning Ordinance amendment in 2005.

Conclusions:

The main idea of CDA zoning is to provide a framework for a developer to design a project more holistically, while taking into account its environmental, social, infrastructural, and other relevant town planning considerations.  In short, the end product should be a comprehensive and better-designed site than piecemeal development. 

To develop a CDA site, a developer must first apply for planning permission from the Town Planning Board (TPB).  What differentiates CDAs from other zones is that the developer applying for planning permission must submit a master layout plan (MLP) as part of the planning application.  Inherent in this process are that environment, social, traffic, drainage, sewerage and heritage assessment reports have to be submitted and approved by expert departments.  Any change to the MLP requires new planning approval and when more than 10% of the plan has to be changed, a new set of assessment reports is required.  When the developer gets planning permission, it can promptly approach the Lands Department to modify the lease if an approved use is not permitted by the lease.  After that, the developer can submit the General Building Plans (GBP) to the Building Authority (BA) for approval.  Only after this can it start to build and eventually get an Occupation Permit (also from BA). 

Interestingly, the team found that developers might not proceed with the planning permission to the next step in the development process but instead made several fresh planning applications. In this regard, the research team found no direct evidence of the deliberate delays or hoarding.

Although these findings are not conclusive in determining the real concerns of the developers in making so many applications after obtaining their first permissions, they reveal a great anomaly that is hard for the public to understand.  Developers experience difficulties that are not well-known to the public: 1) getting technical assessments approved due to a lack of clear yardsticks; 2) the time required to modify a lease; and 3) the rigidity of the MLP system, which demands a fresh application for any minor change in response to new perceived market conditions.  However, it is hard to dispel any accusation of procrastination to optimize sales performance.

To help make the system more efficient and effective in bringing about private housing supply, the researchers make the following suggestions：

• implementation of a levy on MLP submissions，unless they are forced by the government and can bring obvious and significant planning gains to society.
• the Town Planning Board should grant more leeway to developers by allowing them to amend their approved MLPs without going through all or the whole assessment processes again and standardizing developers’ MLP submissions to reduce paperwork.

For the powerpoints at the press conference, please click here.

For media enquiries, please contact the Communications and Public Affairs Office, HKU:
Ms Trinni Choy, Assistant Director (Media), tel: 2859 2606 / email: pychoy@hku.hk; or
Ms Melanie Wan, Senior Manager (Media), tel: 2859 2600 / email: melwkwan@hku.hk.