2023 Spring Issue - 33

to put them in a language that
real estate professionals can
understand and that can change
the way companies think. The key
variable in carbon pricing identified
by the report is price. Carbon
taxes applied by governments are
generally too low to force change,
while carbon prices that companies
are setting for themselves are usually
higher, clustering around €90
($97) per ton in Europe. Exceptions
closer to academic recommendations
are New York City's $268 a
ton and €875 ($942) per ton in
Utrecht, the Netherlands.
LUCY SCOTT is a coauthor of Emerging Trends in
Real Estate® Europe 2023 and a deputy editor of Real
Estate Capital.
Creating More Low-Cost
Rental Housing in
Hong Kong
Creating a critical mass of privately
owned, low-cost housing in Asia
has long been a challenge, in
part because densely populated
cities suffer chronic shortages of
available land, and partly because
high home values mean that private
equity investors are left with
ultra-thin rental yields. Nowhere
is this problem more stark than
in Hong Kong, where, according
to the Demographia International
Housing Affordability report, home
prices last year stood at 23.2 times
median local incomes-by far
the highest multiple of any major
city globally.
With private housing so unaffordable
and waits for public
rental housing as long as six
years, many people are forced into
substandard accommodations.
According to government figures,
about 220,000 low-income earners-about
3 percent of the population-currently
subsist in tiny
subdivided apartments in dilapidated
inner-city buildings.
A recent ULI report, Low-Cost
Rental Housing in Hong Kong,
reports on the findings of a technical
assistance panel (TAP) convened
last December to determine
how to do the following:
create an alternative supply of
private-sector housing available for
a monthly rent of up to HK$6,000
(US$775);
shorten the public rental housing
waiting list; and
provide higher-quality low-cost
housing in the inner city.
First among the TAP's recommendations
is that whether new
supply comes from new development
or the repurposing of existing
buildings, it should be located to
the extent possible on inner-city or
brownfield sites.
" A lot of people go to subdivided
cage-home units in central
areas like Wan Chai because they
want to be where their families
and jobs are, to benefit from the
density of Hong Kong, " says TAP
panelist Eli Konvitz, adjunct associate
professor at the University of
Hong Kong and former director
of the Atkins urban development
and design practice in Hong Kong
and South East Asia. " The problem
then becomes: how do you get
more mixed housing in these existing
densely populated built areas? "
To keep construction costs
down, new homes could be built
using prefabrication techniques
such as modular integrated
construction (MiC), with supply
sourced from factories in Mainland
China, the report notes. This would
be both cheap and fast. It would
also create flexible housing stock
that could be easily disassembled
and moved elsewhere-a big
advantage in downtown locations
where many sites are only available
on a short- or medium-term
basis due to other long-term redevelopment
plans, the panel said.
Typical MiC units would have
both toilets/bathrooms and open
kitchens, housing one to three
people with space averaging at
least 75.3 square feet (7 sq m)
per person.
Hong Kong also could leverage
the city's large amounts of unused
industrial, hotel, and office space
to provide new housing supply.
However, while residential conversions
would also help revitalize
run-down neighborhoods, they
often are unappealing to building
owners because returns tend to
be uncompetitive compared with
conversion for commercial uses.
To address this, panelists suggested
that converted buildings be
reserved for tenants willing to pay
slightly higher-than-normal rents,
as well as for creation of mixeduse
facilities, with some floors
dedicated to residential purposes
and others leased to commercial
tenants.
Both high home prices and a
chronic shortage of land designated
for residential development
mean that government policy concessions
will also be vital to the
creation of new supply. The panel
identified a number of forms these
concessions could take:
reduction or elimination of premiums
(i.e., taxes);
introduction of a new land use
class for low-cost rental housing,
allowing specific zoning of land
for such purposes, streamlining
the development process, and
providing a clear framework for
developers;
inclusion of affordable rental
housing in column 1 of the government's
Outline Zoning Plan,
thereby allowing developers to
A new ULI report, Low-Cost
Rental Housing in Hong
Kong, shares findings from
a ULI TAP held in December.
convert existing industrial or office
buildings more easily;
adoption of inclusionary zoning
by requiring or incentivizing developers
to include a set percentage
of low-cost rental units in their
projects;
implementation of service
agreements to mandate how building
conversions are carried out in
terms of unit design, numbers,
size, layout, and amenities; and
creation of code exemptions
to allow more flexible design
approaches.
In addition, and at the most
basic level, the government could
directly subsidize new supply.
This approach is common in
other Asian jurisdictions such as
Singapore, where the government
accepts an operational loss in the
construction of large amounts of
public housing.
A final factor is finance. The
panel identified this as another
area where the government needs
to be involved, in particular, not
only by cutting taxes and fees, but
also by providing guarantees for
project construction, which can
SPRING 2023
URBAN LAND
33
2023 Spring Issue

Table of Contents for the Digital Edition of 2023 Spring Issue
