This article was first published in Hong Kong’s South China Morning Post.

The Hong Kong government’s recent decision to embrace a new tendering process for the sale of a prime parcel of waterfront land adjoining the Central business district marks a welcome departure from longstanding policy. In the past, such tenders were invariably awarded to the highest bidder without regard to the quality of the proposed development. Now, however, use of a “two-envelope” approach to sell the plot, known as Site 3, means that design also becomes part of the equation.

Urban Land: Arriving at the Best Use for Hong Kong’s Waterfront

Still, while the administration deserves credit for recognizing that there is more than just dollar value to consider, much more remains to be done. The essence of a two-envelope bid is that it balances both financial and design aspects, but in reality a host of factors—including site sustainability, connectivity, community access, and public consultation—are in play. What is important now is that the details are quickly hammered out in an equitable way. Developers will then know where they stand, while the rest of the community can be assured that Hong Kong will get the iconic statement that the city deserves.

One way to approach this is to look at how cities elsewhere have dealt with similar situations. As part of a 2018 study conducted by the Urban Land Institute, a team of some 40 local and international experts met in Hong Kong to consider how global best practices might be applied here. The group explored a range of themes including expanding the planning brief and bid process, establishing the site’s design and development requirements, and identifying how the project can best embrace public expectations. It then made a series of recommendations as to how the government might proceed.

The starting point for the design concept should be the establishment of an overarching vision that addresses the needs of different stakeholders. This is far from easy given the number of competing interests in play, but some values are obvious. Perhaps most important, the concept needs to reflect Hong Kong’s cultural identity. It also needs to be relevant in a citywide context, integrate with neighboring plots (including in particular the traditional CBD), and embody public aspirations for the waterfront and the harbor.

These are ambitious goals, and to accomplish them will require backing from a senior leader within the administration, even when faced with resistance from others with their own ideas and priorities. In the long term, however, a body vested with real power is needed to act as both an honest broker and a source of operational expertise to oversee the complex process of delivering Site 3 and also its neighboring sites on the Central reclamation site that will follow it to market.

Transparency and openness to public engagement are other necessary components of a successful bid process, and the administration would be well advised to look at how other large-scale developments across the world have facilitated public involvement in their planning processes. While striking the right balance is always difficult, there is clear precedent that engaging the public at an early stage generates not only greater satisfaction with the finished product but also broader community support for government generally.  

From a procedural point of view, it would be usual for a two-envelope bid to involve a pre-qualification stage, where bidders first demonstrate their technical, financial, and delivery capabilities, followed (should they qualify) by a second stage in which they make a financial offer accompanied by a design concept proposal. Bids are then judged on both their financial value and the quality of the design.

This is, of course, a subjective test and can involve any number of criteria, including creativity, sustainability, the extent of public input, its success in integrating neighboring areas, and its adherence to a clear set of guiding principles. A weighting is then applied to design scores and financial bids to secure an overall winner.

In practice, this process has been implemented internationally in a number of ways, so there is no such thing as a single best approach. Each framework has its own merits depending on the context, and a detailed study of different options is therefore needed to identify which is best suited for Hong Kong. Once again, however, global best practice points the way forward.

Aerial view of Site 3A in Hong Kong.

For Site 3, various aspects stand out. The existing planning brief already provides guidelines to develop maximum allowable gross floor area (GFA) of 150,000 square meters (1.6 million sq ft), as well as 21,200 square meters (228,000 sq ft) of noncommercial GFA for public areas. However, given the importance of the site, the 2018 study identified the need to establish a set of enhanced guidelines.

These would be intended to create a flexible development envelope for the entire Central Harbourfront, encouraging architectural creativity and compatibility with existing commercial structures and infrastructure in the area. They could include a system of setbacks from the waterfront and reduced commercial building heights, as well as a commitment to a range of other issues, including high standards of sustainability, flexibility for future change (e.g., the potential redundancy of car parking in the future), energy efficiency, enhanced indoor environmental quality, conservation of building materials and resources, selection of materials, use of historic lighting fixtures, and the delivery of effective operations and management.

In addition, the government might consider incentivizing the creation of high-quality public spaces at the site through a GFA bonus scheme. Other international projects have used such rights as an incentive to encourage developers to provide high-quality landscaping, public art, and creative civic functions, as well as to improve connectivity of the new public open space to the surrounding areas. This mechanism, if managed correctly, has the power to create a continuous public realm rather than a space calculated only to satisfy the design brief, which in practice often results in visually unappealing and disconnected spaces.

There is plenty more that could be, and no doubt will be, said. But the one thing to bear in mind is that the currently undeveloped Central reclamation site is the jewel in Hong Kong’s crown, representing a rare opportunity to create from scratch a harborfront that matches or exceeds the quality of harborfronts in other great waterfront cities such as Sydney and New York. Now that we have a commitment to depart from the historical price-driven approach to tendering, the next step will require collaboration, patience, a significant amount of creativity, and a steady eye on the ultimate goal. There is only one chance to get it right.

NICHOLAS BROOKE is the ULI Asia Pacific chair and chairman of Professional Property Services Group in Hong Kong.