Repeated Planning Applications by Developers under Statutory Zoning: A Hong Kong Case Study of Delays in Private Residential Development

Department: Real Estate and Construction
Research Centre: Ronald Coase Centre for Property Rights Research
Active Dates: July 2014 - February 2016

Principal Investigator: Lawrence W.C. LAI (PI), Daniel C.W. HO (Co-PI),  K.W. CHAU (Co-PI)
Funding body: PPR-CPU

Introduction

Is the apparently long and complicated development process of residential units under Comprehensive Development Area (CDA) zoning due to a failure to obtain Town Planning Board (TPB) approvals? Or is it the developers’ strategy of hoarding land for the better timing of the sale of property units? Or is it to improve building design?

Objectives

1. Find out the number of planning applications and amount of time involved for each CDA project before they started construction from the date of the first valid planning application made.
2. Find out if the developer’s amendments to the planning proposals involved innovative responses to departmental comments for each CDA project to start construction from the date of the first valid planning application.
3. Find out if the time taken by a developer to get final planning permission to commence construction for each CDA project with the first valid planning application was due to business innovation to cater to sustainable development or strategic behaviour.

Methodology

Publicly available TPB data, property transaction, Master Layout Plan (MLP) from the Planning Department were used to test various refutable empirical hypotheses.

Study Coverage: 01-1-1990 -31-10-2015
CDA projects: 380 (~200,000 units)

Residential CDA built and occupied: 65
(~100,000 units or around 50% of approved total)

Results

• Of the 2951 applications studied, it takes an average of 8 years (max. 17 years) to complete CDA residential projects from the first planning approval.
• Most changes in the MLPs following new applications were of minor design significance.
• Slight reduction in recorded number of domestic units from 108,401 initially planned to 102,3134 actually built was found.

Land Summary:

a. Total area of all CDA sites for all years 724 ha
b. Total area of 65 developed CDA sites 278 ha
c. Undeveloped and potential residential area 446 ha (a – b)

The approximate housing capacity of undeveloped CDA sites is around 450,000 persons.

Conclusions

No direct evidence of deliberate delays or hoarding were found. Difficulties in land assembly and uncertainty of the property markets are the usual reasons given by practitioners we consulted as the most decisive factors in the lengthy process of development.

Policy Recommendations

• Increase the statutory toleration of the percentage of change to reduce the need for “Class B amendments”.
• Implementation of a levy on MLP submissions.
• Standardize and simplify developers’ proposal statements and MLPs to a mandatory Town Planning Board template.