LandsD 'area model' idea makes sense for the San Tin Technopole

The government may need to think further outside the box when dealing with the Northern Metropolis, specifically the San Tin Technopole (STT). Whilst it has focused on looking for big companies to settle in the area, there appears to be a minimal overall plan.

Whilst Colliers Valuations and Advisory Services experts were pondering the issue,  Hong Kong's Secretary for Development, Bernadette Linn Hon-ho, announced that authorities were considering outsourcing part of the Northern Metropolis to private companies to reduce the government's financial burden. 

Under this new scheme, known as the "area model", private companies would take on development tasks usually the government's responsibility – for example, building infrastructure, developing sites and land levelling – in exchange for lower land premiums. This model is used in mainland China, and Linn believes it will save the government money.

Colliers Hong Kong Managing Director CK Lau Chun-kong, chairman of the Hong Kong Institute of Surveyors' land policy panel and Colliers MD, told the media that the plan would slash land prices for developers who needed to absorb a much larger cost.  
However, he cautioned that developers are reluctant to buy large tracts from the government, as evidenced by six failed land tenders this financial year.

Lau added that the government would still need to bear the cost of basic infrastructure for the Northern Metropolis, including the extension of the rail line and water and electricity supplies, which could not be outsourced to developers.

Whilst this announcement regarding residential developments might seem unexciting – especially when viewed through the lens of current market complications – it will likely have a far better impact on the non-residential side of Technopole. 

The gap

The plan appears sound; however, we have yet to see any firm action that provides the impetus needed for the greater STT to mirror the success of the Lok Ma Chau Loop. What it needs is its own HSITP-like manager.

A memorandum the local government signed in 2017 established the Hong Kong-Shenzhen Innovation and Technology Park (HSITP), a wholly-owned subsidiary of the Hong Kong Science and Technology Parks Corporation, to oversee the infrastructure construction, operation, maintenance, and management required in the Lok Ma Chau (LMC) Loop, and its surrounding areas.  

The first stage of the 87-hectare construction will be completed this year, delivering eight of the planned 67 buildings. These are being built by the HK government and will be leased to occupiers. The remaining buildings will be either government-private partnerships or completely private. 

The bolder choice

If the government is serious about delivering more torque to the Northern Metropolis project, it should consider breaking the land into large portions to be managed by seasoned industrial park developers. The developers will have free rein to decide what happens to the land, being able to lease, develop or sell portions to interested parties. 

The Hong Kong Government could take inspiration from Singapore or mainland China's private businesses or industrial parks. Private park developers are experts in master planning, land development and project execution. They also manage the parks. Such a system in the Northern Metropolis would give developers maximum flexibility. They could lease or sell land to occupiers who want to build their own facilities, such as prominent I&T companies. They can even construct the development according to the occupier's parameters. Or, they could develop the land and lease or sell the facilities.

Handing the responsibility to the industrial park developers will save each prospective buyer, tenant or smaller developer from dealing with multiple government departments and bylaws. The entire process would be streamlined and give impetus to the immense interest from smaller players who want a slice of the Northern Metropolis.

On the other hand, the government will find it far easier to deal with a few mega developers instead of each owner or tenant.