Can developer land banks be unlocked?

Idle land banks

To prohibit intentional hoarding of land without construction, the government has stepped up efforts by imposing a building covenant, which requires the owner of a lot to complete residential property construction within a specific period, generally four to six years, after the lease modification is executed. The covenant does have teeth, as the penalty for failing to fulfill the agreement involves over HK$100 million in fines.

Nevertheless, the deterrent alone is not enough. The lease modification negotiations face a formidable bureaucracy. Transport, railways, environmental protection, planning, fire safety, and other government departments impose conditions, amendments and objections, plus hold veto power on specific proposals. About 1,012 hectares meant for housing are currently held idle by the property cartel, according to government estimates.

Qiao deems Hong Kong's housing shortage to be a paradox of lack of housing in an abundance of buildable land. Only 25 percent of the total land area is builtup, while the remaining 75 percent is woodland, shrubland, grassland, or wetland and country parks, of which only 3.9 percent is devoted to nonrural residential uses.