White elephant cost overrun shock

Hard to believe they are still really going to do this Lantau reclamation – but in Hong Kong these days, unbelievable is normal. The plan is to spend HK$580 billion on something we already have: land. 

Research group Liber estimates that there are 2,000 hectares (that’s 20 sq km/7.6 sq miles) of underused land in the New Territories. But officials insist that there is a ‘shortage of land’.

The truth is that there is a ‘shortage’ of space for housing because ultra-high land-use taxes prevent landowners from developing. If landowners didn’t have to pay massive up-front premiums, they would be delighted to build housing on their property. 

What’s really perverse is that the HK$580 billion represents years of accumulated land premiums. We will now blow it on reclaiming land unnecessarily, which the government can gradually auction off at the highest prices it can – all to maintain ‘scarcity’ and artificially high valuation of space.

And, of course, to channel vast amounts of public wealth into the pockets of engineering companies.

(The ‘Northern Metropolis’ plan will unlock some underused parts of the New Territories. And Hong Kong’s population is falling. Even more reasons not to reclaim off Lantau.)

The government continues its fight with Google – apparently believing that the search engine provides content. But wait! There’s more! Ukraine is also in the doghouse for using the black version of the Hong Kong flag in a video. (Something tells me this wasn’t an accident.)

A court rules on the massage place where a NatSec cop was found last March…

“Of about 10 random visits during the relevant period of time, sexual services were being offered on about half of the occasions,” [Magistrate Jason Wan] said. “One can hardly say it is mainly used for vice.”

So that’s OK then!

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13 Responses to White elephant cost overrun shock

  1. Badass Mothafucka DG says:

    I luvs da places what do the extra bone.

  2. Man from Atlantis says:

    And it’s worse financially, if you look at the details.

    According to the SCMP’s story, the plan is to build just one island at first, with the first lucky residents to move in from 2023.

    So presumably that’s only a third of the (highly optimistic) land revenue.

    Yet presumably all of the infrastructure … train lines, roads etc, would have to be built for island No.1. So the costs would be a lot higher than a third of the total. And then do the other islands ever get built as the population dies off or migrates? Or do we decide the new islands need lots of fancy new infrastructure/further cost?

    And that’s before you consider the inevitable further cost inflation, climate change mitigation etc.

    Madness!

  3. reductio says:

    Well, following past experience with the Bridge too Far, Hi-speed train link, and Sha Tin Central MTR farrago, I think we can safely assume a trillion bucks when the bill comes in. Not that the people presently doling out the contracts will need to worry as they will be sitting pretty with juicy pensions. If those pensions were linked to the money generated from this project maybe they would be a mite more cautious before greenlighting it.

  4. Chinese Netizen says:

    (The ‘Northern Metropolis’ plan will unlock some underused parts of the New Territories. And Hong Kong’s population is falling. Even more reasons not to reclaim off Lantau.)

    Not when they eventually unlock the floodgates and allow total mass locust infestation of correct thinkers and obedient breeders of Mandarin speakers.
    No I take that back…why would any halfway intelligent person with some discretionary cash want to come plop themselves in a place that’s just an extension of what they already know AND with a just-as-miserable education system (assuming they have at least one offspring) and multi million $ match boxes when they can invest in Oz, Kiwiland, Canadia or the States?

  5. Load Toad says:

    …I thought we were being encouraged to move to Greater Bay Arsehole…so why do we need reclaimed land?

  6. so says:

    Oh poo! That’s nothing on a per square foot basis. The HK Govt has just officially blown HKD855,000 in legal costs
    https://legalref.judiciary.hk/doc/judg/word/vetted/other/en/2022/CACV000425B_2022.docx
    on its failure to succeed in blocking a British barrister from representing Jimmy Lai. That would buy about 320 square feet of container occupied and polluted abandoned New Territories rice paddy.

    So perhaps the Director of Immigration is better value for money: a stoke of his MontBlanc and that barrister is disbarred.

  7. Chris Maden says:

    Over the summer I was in a London cab with two very blue, very pro-government, very pro-China apologists, who genuinely believed that the huge protest marches in 2019 were funded by the CIA, that the later violence was fomented by the US, etc., etc.

    It was in that small cab, where I wasn’t allowed to get in a word edgeways as this pair bandied about lies and half-truths, that I learnt the true meaning of “echo chamber.”

    Which is the same way that a government of vested interests by vested interests for vested interests is constitutionally incapable of seeing that this island is such a bad idea in so many ways.

  8. Reactor #4 says:

    The Lantau project is great. The authorities are going to build it anyway, so we may as well embrace it and, at a personal level, maybe even make some money out of it. Importantly, it will irritate the hell out of all those greenie types and NIMBYs who live in the SW quadrant of the city, in Pokfulam and on the Outlying Islands.

  9. Coops says:

    Just another northwards transfer of HK wealth….

  10. Ho Ma Fan says:

    Welcome back #4. I’d heard you’d died.

  11. wmjp says:

    Just another northwards transfer of HK wealth…

    It can’t all be going north surely? There must be a fairly substantial adding of oil to the home-based wheels to keep the corruption running smoothly.

  12. HK-Cynic says:

    The developers do get a bum rap many times. The Lands Department in most cases puts the land premium at a level above where the developer cannot make money at present prices. Why? Because the Lands Department is terrified that they will be accused of “collusion” or “giving it away” to the developer. Best to simply jack the price up, the developer says “no” and the Lands Department people can get on with more important things like where to eat lunch.

    The solution would be for the Lands Department to take a fixed percentage of the revenues of the sales in exchange for the Occupancy Permit. That dramatically reduces the risk for the developer. (Want to retain as apartments? Fine. Use the going cap rate for apartment buildings, multiply by the rent, and you get the value that will be taxed). But that would put risk onto the Government, and we cannot have that.

  13. La Jiu Jong says:

    @ Ho Ma Fan

    “Welcome back #4. I’d heard you’d died.”

    You must have misheard. Only #4’s brain died (a long time back); his corporeal presence lingers on.

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