No new mindset, please

More Hong Kong cultural facilities are closing: the President Theatre in Causeway Bay, and concert and other spaces at the KITEC building in Kowloon Bay. And developers might scrap a planned non-profit performing arts space at a new project in Causeway Bay…

…last month, [Hysan and Chinachem] announced that they could be forced to drop the cultural space in favour of a park because the Lands Department will charge a commercial land premium for an arts and cultural venue. 

The cinema will presumably become stores selling luxury garbage no-one wants, while KITEC will be replaced by office blocks, as if we don’t have enough empty office space already. And developers apparently panting with desperation to promote culture should always be treated with suspicion.

But the three stories are a reminder of the never-ending absurdity of making space as expensive as possible. The Caroline Road case specifically reminds us that it is hard to have ‘nice things’ in Hong Kong urban areas because the government requires developers to pay land-development rights – ‘premiums’ – for attractive features or facilities. 

One small but illustrative example is a walkway from a large office block over a multi-lane highway to a shopping mall in Admiralty, which in turn links to more walkways to other parts of the district. Rather than just walking directly into the mall, users must go down outdoor stairs, into the mall’s street-level entrance, then back up an escalator to continue elsewhere. The landlord (I heard) refused to build an entrance off the walkway because the government demanded a premium. 

The premium serves as an up-front, one-off tax on the increased profits the landlord could earn. In the Admiralty case, there are no profits, nor tax revenue – just inconvenience for pedestrians. The obvious answer would be to simply collect recurrent taxes on higher profits as the landlord makes them. But bureaucrats are obsessed with collecting big premiums (which, perversely, are earmarked for infrastructure projects, however unnecessary.)

Because of this, bureaucrats see concessions on premiums as a subsidy, which in effect they are; not surprisingly, developers have a long tradition of abusing such giveaways. For example, the government offers a lower premium, but in return the developer must provide some public space – and then when the new building is opened, that space is mysteriously hard to find and/or leased out to a business. Bureaucrats and developers are trapped in a cycle of urban-planning assholery, and Hongkongers end up with a nasty living environment. (We’ll leave the Transport Bureau to one side here.)

When they’re not issuing blood-curdling warnings about national-security threats in our midst, senior local and Beijing officials insist Hong Kong must ‘focus on the economy’ and embrace a ‘new mindset’. Every time, I wait to hear how they will abandon this stupid land policy. Because if you really want to reinvigorate the economy, you need to break away from the system that lets landlords capture so much of the wealth – and that’s where you’d start. Until then, talk of focus and mindsets is empty.

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11 Responses to No new mindset, please

  1. Stanley Lieber says:

    Please stop talking sense.

    You need a new mindset.

    Please focus on national security.

    Otherwise, you are doomed to fail.

  2. MeKnowNothing says:

    Additional musical selection for today/tomorrow:

    From shortly after the debut of the Capital Works Fund, no less.

    Same as it ever was
    Same as it ever was
    You may say to yourself/my god what have I done?
    Same as it ever was

  3. Stu says:

    Re: the admiralty reference.I like the end result as the affected office workers, the civil servants, are reminded of the outcome of their own own policies. A reverse form of dogfooding I guess.

  4. Reuben Goldberg says:

    When might executive-led government fix the Admiralty walkway?

    Not in a million years.

  5. Revolution says:

    I always assumed the fractured bridge arrangements over Gloucester Road were deliberate in order to make it easier to close off access to Legco when there are protests.

  6. wmjp says:

    the civil servants, are reminded of the outcome of their own own policies

    Sadly, I suspect that the office workers reminded daily of the outcome of that particular policy fiasco are not the ones responsible. The food-chain high-ups who make policy do not travel on public transport but are chauffeur driven door-to-door.

    Remember the embassassment of Carrie’s first MTR ride?

  7. HK-Cynic says:

    HK Govt: We need lower prices for apartments to make them more affordable.
    HK Govt: We are cancelling the land auction because the bids submitted were too low.

    The Lands Department is terrified that on the negotiated land premiums (converting ag land to resi land) they will accused of “colluding” with property developers. Solution? Set the premium too high so that it makes no economic sense for the developer. Result? So where are we having lunch today?

    How about setting the land premium at $1 and then requiring the developer to pay a percentage of the revenues from the sale (10%, 25%, whatever). That way, the Government shares the risk with the developer – so that the developer has less risk and is more likely to build a lot more flats. It’s like the Government doesn’t really want to see housing more affordable.

  8. Chinese Netizen says:

    @Revolution: Well back in the good ‘ol days (pre 2014?) the buffoons in LegCo really wouldn’t have needed to fear their constituents so much, would they?
    It’s almost as if the higher ups were planning for a total “patriot” takeover….one day.

  9. Reader says:

    @ Stu

    Shall we say ‘dogpooing’?

  10. Mary Melville says:

    Re; Admiralty bridge, Queensway Plaza belongs to the government. It was its responsibility not the lease holder to provide the short connection between it and the bridge over Harcourt. If it wanted the tenant to pay then this could have been made a condition in the lease renewal in 2019.
    The work is finally being done, because the plan was to flog the site for redevelopment into another commercial high rise, all the better to block any sliver of air that might bypass the government offices. It was therefore essential to provide a passage through the construction site. The land sale is now on hold and it was reported recently that they are scrambling to find tenants. Note the number of pop-up stores.

    Re: Caroline Hill. Innocent developer having to pay land premium for arts/cultural space, tut tut. The site was originally the PCCW recreational facilities and zoned for this purpose. When it was decided to flog off some of the site, the plan was to have the commercial on one side and on the other the new court behemoth with a public park alongside. The approved plan put forward by Hysan was for two commercial towers and the park. But then Chinachem came on board and an application was made to replace with park with a third tower. The open space was reduced to nothing more than landscape footbridges and a covered “open space” on the lower levels of the third tower. Despite strong public opposition this was approved. To gain ‘brownie points’ for the transformation, the inclusion of the arts/cultural facility was proposed.

    But now construction is under way that ‘perk’ is out the window. Forgotten in the discourse is that the estate of Nina Wang in 2022 became the Chinachem Charitable Foundation Ltd. There would be reasonable expectation that the developer would now function on the lines of the Jockey Club. But to date the community has received little benefit from its status, apart from the distribution of some masks during Covid.
    The current Sec for Justice, the adminstrator, appears to be as ‘laid back’ as his predecessor re its contributions to society.

    Expectations would be that not only would Chinachem be prepared to provide the arts/cultural facilities, but that also it would fund the operations like JC contributions to facilities like Tai Kwun.

    But despite President Xi’s admonitions re Common Prosperity, here in Honkers its all about wringing the last dollar out of any development.

    How come there was no outcry about the demolition of KITEC that will take away extensive event venues? This has been approved for redevelopment for commercial use despite “No assessment on the territorial demand for convention and exhibition facilities had been undertaken, nor such demand had been taken into consideration.” There are no conditions that the 700 seat auditorium and Star Hall, a popular venue for concerts, that can accommodate audiences of 3,600. are to be reinstated in the new development.
    Of course, we will hear that the new East Kowloon Cultural Centre will plug the gap but this venue will certainly not be permitted to host risqué comedians, Bollywood spectacles, punk bands and all the other niche markets KITEC caters for.
    The aim for arts/culture in the community was summed up in the statement “the proposed development also echoed the development themes of Central Business District 2 (CBD2), and we all know what a humming hive of invigorating activity CBD1 is after 7pm.

  11. Stu says:

    Update: just walk past the aforementioned office tower and the bridge connection concerned. There seems to be building works to connect the bridge to the building. No doubt some strong arming from the new administration was applied ?

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