Mystery of HK's Kai-Tak development

Ming Pao commented on the diverging trends in mainland and HK officials, observing a recent function for Beijing-Hongkong exchange with an illuminiating title, "京港交流 京官學好 港官學差" (Beijing-HK Exchange: Beijing officials change for better, HK offcials degenerate for worse)

I am not going to repeat the details of the examples, as it is not surprising to those who have suffered the Tung era and its legacy. But the discussion talks have about how the stubborn rejection of building government office at Kai Tak (which puzzled the Beijing counterparts) , and it reminds me of the mystery of the Kai-Tak redevelopment.

The HKG airport was relocated to Chek Lap Kok in 1998. Since then then many plans have been proposed and discussed, e.g.

• Residential development to house 240,000-340,000 residents, i.e. up to 5% of HK population (while still leaving significant space for parks and green areas)
• Build an ocean terminal capable of accommodating cruise ships the size of the Queen Mary 2
• House the Hong Kong Sports Institute, as well as several stadiums

More than 7 years have passed, the lot looks exactly the same as a day on July 1998.

We all know that HK is an extremely crowded city, and the living space is extremely limited. This hurts HK's competitiveness and increases the cost of operation. The size of Kai Tak (357 hectare or 3.57 km²) is larger than the full size of Tsimshatsui + TST East (6.85 km² for Yaumatei+Tsimshatsui+Mongkok).

This will qualify as one of the examples of biggest wastage of resource in HK, or even in the world. Let's try to quantify it

• Sino Land won the 50,752 square foot Kowloon Bay site with a bid of HK$1.82 billion
• that is $1.82bn for 4715 sq meter, or HK$0.386M/sq m
• whole of Kai Tai could worth HK$1379bn
• assuming a 4% return, one year rent of this piece of land worths HK$55.2bn/yr and HK$386bn for 7 years (up to Aug/2005, and counting, and higher if one compounds the return), i.e. HK$55k per person for the 7M in HK
• So when you drove through HK Eastern Expressway, or sit on top of Braemer Hill for 10 minutes, HK government has squandered away HK$1M of taxpayer's money
• Even if one takes into account price elasticity, and that 30-40% of the land is to be used as parks and roads, the opportunity cost is no less than HK$150-200bn for the past 7 years
• (Note: the case of Tamar site is peanut in comparison to Kai Kai)

Why Kai Tak has been basically left aside, while many reclamation proposals to narrow our harbors were being pushed forward, remains one of the biggest myths of the supposedly efficient HK government run by technocrats.

But of course, like all the myths I have tried to raise to your attention, the cause is probably due to bigotry, or corruption. In this case, it is probably related to the lobbying of real estate magnates such as Li Kashing, to limit land supply and protect the profit of Cheung Kong. But then why are they still filling up your harbor and bulldozing the green hills? I can speculate for a few "reasons" but I will let you ponder about them first.

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• hk
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