The Hong Kong government’s plan to speed up the construction of the rail backbone of the Northern Metropolis near the border with mainland China will make the megaproject more appealing to developers, but whether they will be persuaded to invest is another matter, experts have said.
Amid a depressed property market, developers have voiced concerns over their profit margins if they commit to building in the hub, which Hong Kong and Macau Affairs Office Director Xia Baolong urged the city to complete as soon as possible.
Sources told the Post that a key topic for Xia during his recent visits to Hong Kong was the Northern Metropolis and its potential as the city’s next game changer for its economic future.
On Tuesday, the Transport and Logistics Bureau announced a first-phase deal with the MTR Corporation that would lower the cost of construction and bring forward the completion of a cross-border spur line by at least two years to 2034.
The deal covers the creation of the Northern Link spur line, which will start at Chau Tau station and end at Shenzhen’s Huanggang Port station, allowing commuters to cross the border with greater ease.
Financing for the Northern Link will be boosted by the government granting the rail giant 10 development sites and deducting HK$39.05 billion (US$4.97 billion) from its land premiums. It also opens the door for the company to work with mainland partners.
Professor Lau Siu-kai, a consultant with Beijing’s semi-official think tank, the Chinese Association of Hong Kong and Macau Studies, said the government was seeking to show its determination to expedite the project while at the same time incentivising private companies to invest in the development.
“Last year, Director Xia began urging Hong Kong to accelerate development, especially by having developers participate. He even led a group to Shenzhen to discuss this. To some extent, I believe the push to speed up railway construction is partly a response to the central government’s particular concerns,” Lau said.
He said he expected that the acceleration of the development of the Northern Metropolis would be a key theme of the next five-year plan covering national development strategies.
“If this is indeed the case, Hong Kong will need to drastically pick up the pace, cutting back on excessive procedures, fast-tracking the approval process for projects and even reducing unnecessary bureaucratic steps and rules,” Lau said.
Formed around the San Tin Technopole and the neighbouring Hong Kong-Shenzhen Innovation and Technology Park in the Loop, the Northern Metropolis is viewed as critical for Hong Kong’s future economic growth, with its potential to create about 650,000 jobs. About 2.5 million people are expected to live in the new area.
In January, the Hong Kong Real Property Federation and the China Real Estate Chamber of Commerce urged the government to expedite infrastructure construction to enhance the development potential of sites and reduce uncertainties for investors.
“The early completion of transport infrastructure will benefit the relocation of residents, businesses, and academic institutions, leading to thriving human traffic that will boost overall economic development and increase developers’ willingness to invest,” Louis Loong Hon-biu, a lawmaker and also the secretary general of the Real Estate Developers Association, said.
Asked if the acceleration of infrastructure development could prod investors into action, Loong said the completion times of the different infrastructure projects would influence their plans.
He also expressed hope that the government would communicate effectively with companies to introduce details of mainland standards to be used in the construction of the spur line, so players could prepare accordingly.
Construction of the spur line is due to begin in 2027 and end in 2034, the same year the Northern Main Line is scheduled to go into operation.
Kathy Lee, head of research at commercial property agency Colliers, said the earlier completion date and the HK$39.05 billion (US$4.97 billion) in financing the government has offered to the MTR Corporation could boost market interest in the Northern Metropolis.
But she noted it would still take nine years to complete the rail lines, while facilities would be ready to be occupied in the coming few years.
“The major concern of developers is about the occupancy rate, whether businesses are interested in setting foot in the project and need that much floor space,” Lee said. “The market still has questions about that.”
She suggested the government could help line up developers and innovation and technology companies hoping to set up offices in the city to tackle developers’ concerns.
But Vera Yuen Wing-han, an economics lecturer at the University of Hong Kong, said the government’s new time frame might not incentivise developers to buy plots due to their current financial position.
“Many are grappling with substantial debt, which limits their capacity to bid on new land due to their cash flow,” she said.
Last November, 85 business heavyweights pledged to support and participate in Hong Kong’s Northern Metropolis megaproject.
Yuen added that a critical factor influencing developer sentiment was the Northern Metropolis’ proximity to the mainland and the ongoing integration between the two jurisdictions.
Some fear investing heavily in the new development could lead to property values being benchmarked against mainland prices, which are generally lower. - SOUTH CHINA MORNING POST
