Property Rights: Only for Hongkong developers

SCMP December 3

The inordinate power of property developers and their ability to bend the Government to their interests is a familiar enough topic. It was evident enough before 1997 and their power appears to have been increased by the subsequent collapse of the real-estate bubble.

How else can one explain the public suggestion by one prominent member of the Real Estate Developers' Association that the cartel which it represents should conspire to boycott land applications to create a shortage and so push up prices, to the detriment of the public and of government revenues? In many countries that would be a criminal offence.

But one cannot blame developers for wanting to maximise their profits. Some blame for property-developer power attaches to the erratic policies towards land and housing that the Government has pursued in recent years. Some is also due to the close connections between top officials and developers.

Before his selection as Chief Executive, Tung Chee-hwa was a partner of Li Ka-shing and others in real-estate development.

Some blame must certainly go to the way numerous senior public servants have retired to cosy jobs in the property sector. And some is due to a naive but common belief in government that strong property prices are a good in themselves, rather than being the outcome of broader economic success.

Blame must also go to the lack of transparency in government procedures which may encourage interested parties to seek back-door approaches. The way the CyperPort project was able to bypass all known development routes may have been an exceptional case.

Perhaps as revealing has been the recent court case of Nina Wang Kung Yu-sum and her fight against the Government for penalising her company, Chinachem, $550 million for late development of a site. Chinachem's original plans had been rejected on height grounds. A key figure in the case is Executive Council convenor Leung Chun-ying, a property expert who previously represented major developers, including Ms Wang, in their dealings with the Government.

In his evidence, Mr Leung asserted that the then-secretary for planning, environment and lands, Bowen Leung Po-wing, now Hong Kong's representative in Beijing, made a verbal commitment to him that Chinachem would not be penalised. Bowen Leung has denied it, saying that it was ''extremely impossible''. At least he was contrite. He admitted that, ''I should have told them, `Don't come to me''', but added that they kept coming back.

Whatever the rights and wrongs, the case is a poor commentary on government procedures, as it shows the informal access, on more than one occasion, that Leung Chun-ying and Ms Wang had to Bowen Leung, bypassing formal procedures. Everywhere in the world, lack of transparency and bypassing of proper procedures in dealings between government and the private sector is a major contributor to corrupt practices, as is lack of adherence to formal procedures.

The right to know is not only due to the public for its own sake, it is the sunlight which keeps systems disinfected. Just how obscure and untransparent development procedures can be I have myself just discovered at first hand.

Recently, the Apple Daily newspaper published a list of developments which had, it said, been approved by the Buildings Department in September. It included the building where I live and of which I own one-twelfth (there are 12 flats in it). This was the first I or my owner-occupier neighbours had heard of the apparent attempt by the owner of one half of the building, which shares common areas and access, to redevelop his half of it without the knowledge or consent of the other half.

I went to the Buildings Department to find out more, but despite persistence, I was confronted by a wall of silence. Officers would neither confirm nor deny the newspaper list of approvals and refused to provide any information. They advised that a brief account of September building approvals would be published in due course on the department's Web site but I had no right to see any drawings or other details.

These were described as the ''copyright'' of the developer and his architect. This seemed to me an extraordinary abuse of the law of copyright. It appears just a cover for secrecy and for untransparent dealings between a developer and the department.

But what can a member of the public do in the face of such refusal of government departments to be responsible to the public? If the department is correct in saying it has no obligation to give me information about a development which affects my own property rights directly, and the public indirectly, there can be no way of knowing whether the design is in accordance with the plot ratios and lease terms of the land.

No information means no oversight. Are we expected to trust government departments with an appalling record of losing public money to developers? I do not.

Given my experiences of the past few days, it comes as even less of a surprise to find out how often ''technical mistakes'' by officials concerned with land and buildings can cost the public purse huge sums, to the profit of developers. The latest government audit report revealed a reserve price undervaluation, amounting perhaps to $1 billion, due to ''loopholes in building classification'' on a site acquired by Sino Land, which was able to increase the developable floor area by 20 per cent.

Sino's coup brings back memories of the notorious 1994 case of Coda Plaza in Garden Road. Li Ka-shing's Hutchison group found a way to put up a 24-storey building on a site intended by the Planning Department for seven storeys. I remember all too well writing in the early 1980s about a ''small mistake'' in the pricing of the land premium on a Central office development - what is now Fairmont House.

The government auditor looked into the case and found that hundreds of millions of dollars in land revenue had been lost

. Given the value of development rights in Hong Kong, the need for transparency in applications, approvals and changes in zoning, plot ratios, land use rights etc is absolute and imperative. The secrecy of the Buildings Department is outrageous, but may be all too typical.


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