ST : HK chief addresses housing concerns

Oct 14, 2010

HK chief addresses housing concerns

Govt to release more land, curb property investment immigration

HONG KONG: The city will suspend a permanent residency scheme for wealthy investors and build more flats, as part of new measures to cool its overheating property sector and appease public anger.

In his annual policy address laying out Hong Kong's policy blueprint for the coming year, Chief Executive Donald Tsang said he was responding to public concern about the residential housing shortage and skyrocketing prices.

'Housing is currently the greatest concern of our people,' he said. 'Many find it unnerving that property prices have kept rising and years of hard-earned savings cannot even cover a down payment.'

To increase supply, the government will release land for about 20,000 more private flats annually over the coming decade, while about 61,000 private residential units will be added over the next three to four years.

Mr Tsang also announced plans to build residential property on the site of the city's old airport, Kai Tak, which was closed down in 1998. The prime site at Victoria Harbour remains undeveloped as the government cleans up heavy aviation pollution.

Property prices here have risen 15 per cent since the beginning of the year, after rising by a third last year. The increase is mainly fuelled by low interest rates and purchases by wealthy mainland Chinese facing policy tightening at home.

Some investors, such as those from the Chinese mainland, bought apartments in Hong Kong to take part in a scheme allowing them to obtain permanent residency if they invest at least HK$6.5 million (S$1.1 million) in real estate or specified financial assets. Since the introduction of the Capital Investment Scheme in October 2003, a total of HK$52.9 billion has been invested in the city, with a third of that going into property, Citigroup said in a report.

Mr Tsang said the government would adopt a temporary amendment to the scheme, which takes effect from today.

The speech sent share prices of major property developers plunging before the sector recovered much of its lost ground. Sun Hung Kai Properties dropped 0.59 per cent and Sino Land fell 0.12 per cent.

Mr Simon Smith, head of research at consultancy Savills Valuation and Professional Services, said: 'The new policy measures are fairly conservative... It is the government's intention to gently head off the bubble; it is not easy to do.'

Mr Tsang also said yesterday that Hong Kong's economy is expected to grow 5 to 6 per cent this year as it completes its recovery from the global financial crisis.

Noting the city's rich-poor gap, he said his administration will set up a HK$10 billion 'Community Care Fund' to provide assistance in areas not covered by the existing welfare system. He will raise half of the fund from the business community.

Critics said, however, that the proposals do not address poverty and property prices systematically. Opposition legislator Lee Cheuk-yan said the new charity fund is too ad hoc, urging Mr Tsang to launch a tax credit for the poor and a government-run pension instead.

Public anger was on display outside as Mr Tsang spoke inside the British colonial era Legislative Council building.

'With property prices soaring to new heights, the poorer sections of society have no hopes of buying their own apartments,' protester Penny Keung said.

Poor air quality, which is another frequent complaint of residents, was also addressed in Mr Tsang's speech. He said he aims to cut the city's greenhouse gas emissions by up to 33 per cent by 2020 with a shift from fossil fuels to nuclear energy, but environmentalists warned about the dangers of nuclear waste.

AGENCE FRANCE-PRESSE, REUTERS