Secretary for Development Bernadette Linn Hon-ho is on Straight Talk this week. Linn says Hong Kong needs land not just to meet residential need in the short and long term, but also for commercial, community, and urban redevelopment in the much longer term. The government is ready to raise debts and issue bonds to support infrastructure and land development "because that is investment into the future".

Check out the full transcript of TVB’s Straight Talk host Dr Eugene Chan’s interview with Bernadette Linn:

Chan: Good evening! I am Eugene Chan, and welcome to Straight Talk. Our guest tonight is the secretary for development, Bernadette Linn. Linn has been with the civil service for 35 years, and has served in various bureaus and departments, including Education, Financial Services, and The Treasury. Before her current appointment in 2022, she was the director of lands, and then permanent secretary for development in 2017. Welcome, Bernadette!

Linn: Hello, Eugene!

Chan: Bernadette, our viewers may be surprised by the title of our show tonight, “Does Hong Kong have too much land supply now?”, as it is common knowledge that Hong Kong has faced a significant shortage of land for public housing for years. However, the current government in fact has made strides in increasing land supply. The financial secretary, Paul Chan, announced in February that the potential land supply for 2024-2025 is around 15,000 flats, which is approximately 14 percent more than the annual demand projected in the long term housing strategy. So, in other words, have you found enough land in your plan? And does Hong Kong have too much land supply now?

Linn: Eugene, first of all, I think we just do not have the condition to say that Hong Kong has too much land. When we have so many on the waiting list for public housing, we have an aging population, and we do have to catch up with the provision of various facilities, like elderly homes. And also, we are facing a crucial problem, in the need for redeveloping our old urban areas. We need space to decant the population to newly developed areas. So with all these in mind, I just do not think we can afford to say that we have too much land. And this is why a few years ago, the government has done a rather long-term planning. We looked at 30 years ahead of us, up to 2048. And in that forecast, we have shared with the Hong Kong community that we will need around 6,000 hectares of land.

Chan: Right.

Linn: Total 6,000 hectares to meet various needs in housing, economy, and various community facilities. And to meet that demand, we have identified potential sources, potential sources of land, giving 7,000 hectares. And with that in mind, we are now taking forward various planning of the different areas. And when those are ready, we roll out and start with the relevant works and move towards our goal of having enough land to meet the needs of the whole of Hong Kong all the way up to 2048.

Chan: Right. Secretary, I am sure the viewers are going to ask you, ‘Do we still need so much land?’ Especially there have been some changes in our population, recently. For many years, we haven't had a drastic number of people leaving Hong Kong, which we did in the last few years. Hopefully, some of them are coming back. There will be new people coming to Hong Kong. However, we have a low birth rate. And more importantly, there are a lot of uncertainties at the moment because of the geopolitics and everything. So, with that in mind, and also with the current economic downturn, will you need to adjust your goal and approach to land creation, and even housing construction?

Linn: I don't think so because when we do land development planning, we just do not look at population figures fluctuation over 1 or 2 years. We have to look at population forecast over a longer timeframe. Why? Because when we try to get the land ready, we start with planning, and then do the works, and have the land ready. That will take years. It won't happen in matter of months. So, we have to look at population forecasts down the road, and the figures will speak for themselves. Our Census and Statistics Department said last year our population is 7.5 million, 7.5 million people. But when you project all the way up to 2046, even in low-end scenario, high end scenario, or what we call the baseline scenario, all the figures are above 7.5 million people. So, we have to prepare for the larger population down the road. And as I have mentioned just now, population increase is just one thing. We also have to look at improvement to the livelihood of existing population, and also the redevelopment needs.

Chan: Right, very fair comment you have made. However, in the past decade, where I had the privilege to be with the Town Planning Board for a little while, I realized that the land creation and all the processes take a lot longer than current government. With all that more efficient government and the goal to deliver land, do you think we are sort of delivering it too fast?

Linn: No because right now we have been saying that for the next 10 years, we will need public housing and we are set to deliver public housing of some 400,000 units above the target because we want to shorten the waiting list and shorten the waiting time as much as we can. And we have also been saying that we need to develop the economy of Hong Kong, we need land not only for housing, but economic enterprises, technology and innovation, and logistics. And that's why we have an ambitious program in the Northern Metropolis. And we are set towards getting the land ready in the next 10 years. And we have to do that now because if we do not take forward our various planning proposals, where will the land be when the enterprises come? Just now you mentioned the rather long town planning process, you are right that, last year we streamlined the statutory requirement. So, for large development areas, talking about over 100 hectares in size, previously it will take us 13 years from starting the first planning, the idea, to having the formed land ready. Now it will take us around 7 years …

Chan: Wow, so nearly half.

Linn: … to have formed land ready. But still, 7 years is a long period, it is a rather long period. So, we cannot stop because of economic fluctuation because when the economy picks up, we must have the land ready.

Chan: Right. Another issue I am sure that concern a lot of viewers are, I remember a few years back when the housing, private housing prices, especially when it was sort of going up in a fast pace because we are anticipating a shortage of land supply for private housing, so now even with the housing market is down, and I am sure you want to maintain the stable housing market. So, will this land supply sort of method will be one way to help maintain Hong Kong having a stable healthy market?

Linn: Definitely because we have to roll out the land supply in a continuous and stable manner to help stabilize our property prices because we do not want the prices, talking about the private property market, to go up and down like a roller coaster. So, as you have seen last year when the property prices have continued to go down, we still continue with our efforts to form land. But as to when we roll out the formed land in the market that is something we can control. We always come up to talk about our land tender program on a quarterly basis. Why do we do that on a quarterly basis? Because that will allow us to look at the market situation within a short time horizon. So, I have always been saying that doing the land development projects, having the infrastructure ready is a different concept from when we actually roll out the land in the private market.

Chan: So, Secretary, you have reassured the viewers that the government policy to having and maintaining a healthy housing market will be able to be backed up by this land bank that you have. Right. Since you mentioned about developing further land, we often hear about the Lantau Tomorrow Vision project, which is quite a large project. Do we still need to continue in that direction? Because as the financial secretary said, we have, at the moment, we have identified enough private flats. And also recently, I think the government also announced that we have 100,000 more public flats can be available in the next 10 years. So, do we still have to move along that project?

Linn: This is what we called the Kau Yi Chau Artificial Islands, talking about reclaiming around 1,000 hectares of land of this tiny Kau Yi Chau island now existing. We have been saying that we are determined to take this project forward. In his last budget, the latest budget speech for this year, the financial secretary, what he said was that we will sort of slightly defer the program a bit.

Chan: Right.

Linn: To allow us more time to plan ahead with the financing, and also focus on northern metropolis at the moment. But Kau Yi Chau reclamation is a project that we are determined to take forward. Why? Actually it is not only because we are talking about 1,000 hectares of land, not just about the quantum, but its position, because its geographical position will enable us to build very strategic rail link and road link, linking up Hong Kong Island pass through this Kau Yi Chau, Lantau, and then all the way connecting to the Northern Metropolis, and also to the Zhuhai area, the Hong Kong Airport, and then all the way to Hong Kong Zhuhai Macao Bridge. So, it is an important position, allowing us to provide a strategic transport links, linking up with the Greater Bay Area cities in various directions.

Chan: Right, Secretary, let’s take a break now. And viewers, stay tuned, we will be right back.

Chan: Thank you for staying with us on Straight Talk. The secretary for development, Bernadette Linn, is here this evening, and giving us an update on the state of our land supply and development in Hong Kong. So, Secretary, in the first half, you have reassured us the government will have identified all the sources for the land, and the formed land will be released accordingly, depending on the situation, provided it fits your policy, healthy housing market in Hong Kong. That is very reassuring. As we all know, Hong Kong, at the moment, is a bit sluggish. And there is the pressure on financial resources, especially a lot of things have happened in the last few years. We know that all these projects are quite costly, and we still need the private sector to be involved, like in the tendering process. In recent times there have been unsuccessful tenders, so are you worried? And how do you actually reassure the business sector everything is under your fingertips?

Linn: I think when you talk about failed tenders, probably you are talking about the land sale tender for private housing because when we do land development projects for the works tender, that has been going on pretty well, so no failure as such. But when we talk about the private housing, the tender, the example I have always been using is that it take two to tango. When we do tendering, our land valuation experts in the Lands Department, they assess the market price on the day when we close the market tender. So, probably the developers will also have their valuers, and they also do their own evaluation. When the two do not talk, or the figures do not match, then the tender failed. But when we start the tender again some months later based on past experience, we got it, it is successful because valuers will always adjust their pricing in the light of the market conditions and in the light of figures they have secured from previous failed tenders. So, I am pretty confident that we can hold, we can control the trend. On and off, there will be failed tenders, but no need to worry about that.

Chan: Right, thank you for your reassurance. Earlier you mentioned the Kau Yi Chau and you were also talking about the Northern Metropolis. I think Hong Kong people now understand the need to have land to develop because without land, as you said, apart from housing, there is also social and economic needs. You know this Northern Metropolis seems to come in a time when Hong Kong hasn’t got enough land, now we have it, so where are we in the project? And seems like it is going to be quite a long term thing for Hong Kong people. Anything that is happening this year? And when will be the earliest time of actually seeing deliverables to the people?

Linn: Actually when we talk about the development of Northern Metropolis, we are talking about the development of some 3,000 hectares of newly developed land in our two districts – the Northern District and the Yuen Long District. Actually works have already started a few years ago. So, when you go to the Northern District and Yuen Long, nowadays you will see a lot of the tower cranes around the areas, lots of construction sites. This year we already have some quick wins, like what we call a conservation park in the Long Valley ready. And we will have our first dedicated rehousing estates for those affected by our development clearance. We will have that estate ready by the end of this year. And recently we have been very encouraged because we are progressively going to our Legislative Council to seek funding, to start site formation and infrastructure works for the next stages of our new town development. And we are pretty smooth in the project, in the process. So, we are pretty confident that we will be able to deliver our pledge of having, just now we are talking about, 3,000 hectares of new land in the Northern Metropolis. We are quite confident that will be able to deliver some 40% of that in the next 10 years or so.

Chan: Right. When you are saying that achieving 40 percent meaning quite considerable amount of land will be newly formed land, as you mentioned. So, this is quite a large scale and costly project, and I am sure the government, as in the past, would like to involve the private sector. How would you involve private sector in an efficient way, especially now, when there are some uncertainties? When you mentioned publicly the idea of largescale land development, how does that all going to work? And how will the viewers understand what the government is trying to do?

Linn: This, what we called large-scale development, is indeed something we are exploring. You see, conventionally when we do new town development, government going into the area to resume the land because some are private land already held by villagers or other developers. We resume the land, we do the clearance, and then we apply for funding to do site formation, and then build the infrastructure. All these will cost money from the public coffers. We do the payment upfront. In the idea you mentioned just now, what we are trying to explore is if we can identify a relatively large area in the new town development, within that large area there are financially profitable elements, like private housing, privately owned commercial towers. These are commercially profitable. And we also built into that area government facilities, roads, those are not profitable to the developer. But we sort of tender out this whole stretch. Whoever comes in, they will pay, offer a premium. But of course, when they offer that premium, they will take into account the extra cost that they have to bear in helping the government deliver the roads, deliver the community facilities, those non-profitable elements.

Chan: So, basically as a partner?

Linn: Yes. So in that case, the government do not have to pay upfront. On the contrary, we receive premium upfront albeit a smaller premium because some discounts or adjustments have been made by whoever is bidding to take account of the extra costs.

Chan: Right. Certainly this is a new initiative. And hopefully it is going to work out because it is going to help both sides, isn’t it?

Linn: I hope it will work out.

Chan: I must bring out an area that I am sure the viewers have been reading in the newspaper in the last few years back that we always have this called the Environmental Impact Assessment. And recently at the San Tin Technopole, there have been some controversies that some environmentalists saying that the filling of fish ponds for I&T land is not the right thing to do. I am sure they have their views. So, how is government going to address the concern? Hopefully the current government, although it is executive led, it would still be very fair and let them know the reason behind. So how do you find the balance between development and actually conservation, which I am sure the Hong Kong people will treasure very much?

Linn: First of all, when we talk about the San Tin Technopole, the entire technopole comprises around 600 hectares of land and about half, so 300 hectares, is for innovation and technology. Actually only about 90 hectare or so will be done by filling of fish ponds. But we have been saying that those are not active fish ponds anyway. They are rather wasted or idle fish ponds. So, it is not that we are going to wipe out fish ponds and sacrifice fish ponds to do the San Tin Technopole, we are only affecting certain fish ponds, which are not active fish ponds in the first place. And… but we are not going to ignore the fact that those are fish ponds anyway, so we have to do well in the conservation part. And that's why throughout the, what we call, the Environmental Impact Assessment process, that is a very serious process, and it has been recently approved by a Director of Environmental Protection. And when he gives the approval, he set conditions for us, though we are in the same in the same government, he still sets conditions for us that we have to comply with. For example, how we are going to revitalize some of the idle fish ponds. And also how we are going to do, what we call, the ‘Sam Po Shu’ wetland conservation park, which is next to the San Tin Technopole. And do some active conservation in the area to help enhance actually its conservation value.

Chan: Right. One quick question before we want to move on is that you know that, you mentioned that we want to have partnership between the private and the public, but then we see some land exchange application for Kwu Tung North and Fanling North failed to be concluded before the deadline. Do you see this any sign of no support from the private sector?

Linn: I won't look at it that way because when we look at land exchange in the Northern Metropolis, what the government is actually saying is that the Northern Metropolis development is something led by the government. So, we have to take the lead. But if you happen to be holding the land, which in future will be developed into private housing or private commercial enterprises, then we give you, as lot owners, the chance to partake in the development, failing which we will resume your land and take the lead. But during the land exchange process, sometimes the developers and the government cannot agree or settle on the premium. So, again, it takes two to tango.

Chan: Right. Secretary, one last question, quick answer. Hong Kong have been running shortage of labour, and also we have a very high construction cost. Do we have enough resources, in terms of land and financial resources, to do all these projects?

Linn: A simple answer. For financial resources, we will do our planning well.

Chan: Right.

Linn: And then we will also raise debts and issue bonds to support our infrastructure and land development because that is investment into the future. For construction manpower, we are importing and we are also training up our young people to join the construction industry.

Chan: Alright. Thank you, Secretary. It is encouraging to see the significant strides that the government has made. To be able to meet the challenges or balancing land supply and marketing demand is indeed crucial for Hong Kong's future.

As 19th century economist David Ricardo said, “The value of land lies in its scarcity”. Have a good evening and see you next week.