Property

Treasure island

Hong Kong’s latest $64 billion buildout plan

East-Lantau-w

The circle marks the proposed spot

In 1841, trading company Jardine Matheson acquired the first plot of land sold in Hong Kong after the territory became a British colony. Hoping to take advantage of the strategic location in the middle of what is known today as Causeway Bay, the land was developed into shipyards and warehouses.

In 1973, again spotting an opportunity, Jardine converted the warehouses on Hong Kong’s Lot No. 1 into the Excelsior Hotel. It reckoned again that the location, near a new cross-harbour tunnel, would be attractive for tourists. The spectacular views of Victoria Harbour and the Yacht Club were also a big plus.

Last week, Mandarin Oriental, the Jardines-controlled hotel group, announced plans to shut down the Excelsior at the end of March. It will replace it with a new commercial high-rise, ready for letting by 2023.

“The decision reflects strong commercial property values in Hong Kong and the expected higher yield associated with a commercial building at a time when the hotel requires significant investment,” the company said in a statement.

In some quarters the move prompted nostalgia – given the hotel once symbolised an important chapter in the territory’s history.

“Perhaps no one notices the hotel anymore. But the hotel represented the development of Hong Kong in the 1970s and what hard work the previous generation had gone through. It witnessed the relationship between the people and the land. It also begs the question, is our society only about real estate?” one opinion writer wrote for Next Magazine.

Real estate also topped the Hong Kong government’s policy agenda last week, as it announced plans to build a massive artificial island to help tame the property-mad city’s runaway home prices, which have been the least affordable worldwide for eight consecutive years, according to a survey by Demographia, the urban public policy group.

The project, which is to reclaim 1,700 hectares of land to the east of Lantau, could eventually provide up to 400,000 residential units and accommodate 1.1 million people over the coming 30 years.

Known as the East Lantau Metropolis (ELM), it promises to be Hong Kong’s largest and most expensive infrastructure development (overtaking Hong Kong International Airport, which is also situated in Lantau), with a projected cost of up to HK$500 billion ($64 billion).

“It is, in my view, quite narrow-minded to avoid doing a thing because it is expensive,” Hong Kong chief executive Carrie Lam said at a press conference. “We need to ask ourselves whether this plan will provide a long-term supply of housing and land to meet the long-term social and development needs of the people of Hong Kong.”

According to government estimates, Hong Kong will be short of 1,200 hectares of space for housing and economic purposes in the next 30 years. As WiC discussed in issue 405, the government has been reviewing different proposals – like taking back a prestigious golf club in the New Territories area – to bridge the shortage in residential land supply.

The ELM project could also speed up the development of Lantau, enhancing the island’s role as a bridge between Hong Kong and other parts of the Pearl River Delta. Lantau, the city’s biggest island, is the starting point in Hong Kong for the bridge to Macau and the Chinese mainland, set to open next week.

The Hong Kong Economic Times reckons that the ELM project could play a big part in enhancing the city’s logistics and tourism sectors. But not everyone is a fan of the artificial island. Critics have lambasted the government for “throwing money into the sea”, claiming that Hong Kong’s population will decline in the next 20 to 30 years.

Meanwhile, environmentalists are worried that the reclamation process will endanger the Pearl River’s pink dolphins and that the new housing projects will be vulnerable to rising sea levels and extreme weather.

“This is the most damaging policy address in Hong Kong’s history,” said Roy Tam, chief executive of the environmental group Green Sense. “How can [Hong Kong’s chief executive] Carrie Lam say this is to help those living in subdivided flats when there won’t be any flats until more than 20 years from now?”


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