HONG KONG—A prime piece of Hong Kong waterfront land is coming up for development, but there are fears amongst real estate professionals that the city’s development regime will not deliver the type of world-class project that would enliven the waterfront through a better mix of uses and improved pedestrian access.
Several real estate organisations like ULI proposed in recent months that the Hong Kong government make changes to its traditional land tender process to take advantage of best practices elsewhere in the world, but the city’s Development Bureau does not seem amenable to change.Central Harbourfront Site 3 is a 4.76-hectare (12 ac) plot located front and centre on Hong Kong’s iconic waterfront. It lies between Central, the main business district, and the Star Ferry Piers, an important transfer route across Victoria Harbour from Hong Kong Island and Kowloon. Most of the land was reclaimed around 20 years ago and has had temporary uses while the road network has been developed. The site also includes the existing General Post Office, which is further inland.
“This is a signature site, and if it’s done well it could enhance the whole waterfront. The harbour is the jewel in Hong Kong’s crown and must be treated with care,” says Nicholas Brooke, chairman of Hong Kong’s Harbourfront Commission, which acts as custodian of the 73 kilometres (45 mi) of harbour.
Ivan Ko, chairman of the industry association known as the China Real Estate Chamber of Commerce, Hong Kong & International Chapter, is even more emphatic about the importance of the site.
“We should be thinking about a development that will last 100 years, not just something that might be on site for 30 to 40 years,” he says.
“Hong Kong needs a project that will be architecturally significant, with international status, but it also needs to be adaptable for the future.”
Commercial and Public Spaces
The site lies on reclaimed land and is the largest and most valuable part of a larger Central Harbourfront land parcel. The planning brief calls for a maximum of 150,000 square metres (1.6 million sq ft) of retail and office space with the provision of 25,000 square metres (269,000 sq ft) of public space, 12,000 square metres (129,000 sq ft) of which must be at ground level, plus walking links between Central and the ferry piers. The planning brief also specifies that the public space must link to the planned ten-hectare (25 ac) waterfront promenade to the east of the site.
Site 3 is part of a wider Central Harbourfront area, which has seven sites totalling 11 hectares (27 ac) that will be developed over the next decade or so to provide public, government, and commercial space.
It is estimated that the site could fetch HK$60 billion to HK$70 billion (US$7.7 billion to US$9 billion) in a public tender, which would make it the most expensive in the city-state’s history. By contrast, the existing record, set by a site in Kowloon last year, is HK$24.6 billion (US$3.1 billion).
So, with a prime site on one of the world’s most recognisable waterfronts ready to be developed, what is the problem? The problems are threefold. First, some Hong Kong residents think that their harbourfront could be better than it is now and that it is less accessible and attractive than harbourfronts in other cities; second, that the planning brief for the site is out of date and restrictive; third is that Hong Kong’s land tender system, which dates from the 19th century, is considered by some to be unsuitable for delivering a world-class development.
“Hong Kong should be celebrating its harbourfront; there’s not much to draw people down there right now,” says Simon Bee, global design director at architect Benoy in Hong Kong. “At certain times of the year, the waterfront is abuzz with activity and people—[during] the New Year’s fireworks, for example. But the challenge—and the opportunity—is making this a great environment to visit whether there is a big event on or not.”
Bee points to the recently completed Tamar Park, which also runs along the harbourside on the eastern edge of the Central district and which has had a mixed reception from the public. “Tamar Park is an interesting piece of landscape, but it doesn’t actually have very much there to hold people. You can’t go there and find great dining places or sports places or street theatre,” Bee says.
Last year, Benoy and the Hong Kong office of engineering consultancy Buro Happold joined forces to produce a series of conceptual designs for Site 3, which demonstrate the potential for innovative urban design.
The planning brief requires that the existing road network be maintained and that sightlines between certain locations in Central and the harbour be maintained. This means the development will consist of three large but somewhat low-rise buildings, each with substantial underground space that is mainly designated as retail.
As dictated by the planning brief, the three blocks are to be connected by an outdoor deck; two of the blocks are also supposed to be connected at one level underground. This means that the development will have three retail blocks instead of one large space. The largest building on the site also needs to house a new General Post Office, since the current 1970s building is set to be demolished.
Bee suggests that the plan for the use of the buildings could be adapted to produce a better development. “The plan for the three below-ground spaces is retail and the new post office, but we know that disconnected retail does not work,” he says. “Perhaps we should think about different uses? We could have an art gallery, a new maritime museum. You can have some kind of rainforest ‘edutainment’ centre, a concert venue. Things like these bring a lot of people to the location and they’ll use the other facilities, too.”
The planning brief created for Site 3 is rooted in a public consultation held a decade ago and which insists on the demolition of the post office, which, while not an example of great architecture, is recognisable and one of the few remaining older buildings in Central. “In the government’s proposed scheme, the General Post Office will be demolished,” Bee says. “Yet I think that, although it’s a 1970s building, it’s another memory of Hong Kong that if we don’t care for it, we just discard. Hong Kong then becomes placeless, with no anchors in its own history. My preference would be to see the building repurposed. It’s quite elegant. It’s got some good spaces in it.”
Ko suggests that any development at Site 3 be linked with recent initiatives such as Harbourloop—a plan to form a continuous pedestrian link around the whole harbour and Walk Des Voeux Road Central, known as Walk DVRC, which proposes that one of the main roads in Central be pedestrianised. These projects, both of which post-date the original public consultation, “seek to make Hong Kong more liveable and walkable,” he says.
Brooke is also concerned that Hong Kong will not get the site it deserves. “One of the themes the Harbourfront Commission has is the importance of bringing vibrancy and life and diversity to the waterfront. We need diversity in both the use and the design of the space.
“The planning brief is minimalistic in terms of content, but we have advised that the government ought to prepare a more comprehensive development brief. There needs to be much more attention paid to the design aspect,” he says.
Refining the Process
All land in Hong Kong is owned by the government and all tenders work along the same lines: the government produces a planning brief and the site is put out to public tender. The highest cash bidder wins and a 50-year lease (which can be extended) is granted, and any future development is subject to planning approval.
Critics say that this is not enough to ensure world-class urban development. Tiffany Lau, founder and principal of New York– and Hong Kong–based Apart Companies and executive director of ULI Hong Kong, prepared a report titled Urban Stewardship through Balanced Disposition Procedures in the Sale of New Central Harbourfront Site 3 that shows how several different tender processes might be used.
Last year, ULI Hong Kong held a conference to discuss options for the site and has been talking with members and government to find a way forward.
“ULI is not saying: ‘This is the way to do it. This is the way forward,’ Lau says. We just want to outline the options to help the Hong Kong government make the best-informed decision.
“I think the development community here in Hong Kong, whether vocal or not about it, is also looking for benchmarking,” Lau continues. “How do we build the best that we can? Increasingly, it is about taking a global view. Cities are competing globally to attract and retain talent, so they need to look globally to find best practice in urban design and development.”
One of the proposals that has attracted some support is the “two-envelope system,” which would require both a design submission and a financial submission. Brooke says, “I’ve been an advocate for the two-envelope approach. There is a precedent for infrastructure projects, where Hong Kong requires a technical bid, to demonstrate the capability to run a project, as well as a financial bid. So, it would not be a great leap for the government to require a design submission as well as a financial one for Site 3.”
However, in a written statement in response to questions from ULI, a spokesperson for Hong Kong’s Development Bureau confirmed that it intended to proceed as usual.
“Through the elaborate design requirements in the planning brief and the Town Planning Board’s gatekeeping function, we consider that there are adequate safeguards to ensure that the urban design study–recommended design, which has gained broad community support, will be fully implemented. Our intention is to dispose of Site 3 through the normal land tender arrangement.
“The future developer of Site 3 will be required to submit a master layout plan based on the planning brief for the Town Planning Board’s approval. In other words, the Town Planning Board will be the gatekeeper in ensuring that the design requirements will be complied with before the development is allowed to proceed.
“We fully agree that Site 3, being part of the new Central harbourfront, should be planned holistically,” the Development Bureau’s spokesperson said. “Given its prime location, we are also keen to see that this harbourfront site not only will provide commercial space in the core business district, but that it can also be designed and developed into a space that Hong Kong people can be proud of, and a space that Hong Kong people would love to visit to enjoy the harbourfront.”
In response, Brooke says, “As chairman of the Harbourfront Commission, I am disappointed and indeed rather surprised to learn that the bureau has made such a categorical statement, as I am sure will be the members of the commission as well as the many others who have expressed views on the strategic importance of the site.
“On the basis of comments made at recent meetings of the commission, members were given to understand that the government was seriously considering the concerns of the commission and others in the community and that no decision had yet been taken on the mode and form of sale.
“If government is intent on proceeding as normal, the commission and others who believe that design should be an essential component of the decision-making process will need to raise the profile and awareness in regard to the future of this iconic waterfront site and seek to persuade the government to rethink its position.”
Not all Hong Kong property experts are opposed to the current tender system. Gordon Ongley, former development director at Swire Properties, who retired in 2016, says: “If the government went down the two-envelope route, for example, then we would need someone to judge the designs. Who will do this? No developer can be involved; an international panel could be seen as too remote from Hong Kong. And is the government the best ultimate arbiter of design? The look of government-led projects suggests it is not.”
Some critics have suggested that Hong Kong—a rich city with a budget surplus for the year to April expected to be around HK$160 billion (US$20.4 billion)—does not need to seek the largest sum possible for Site 3. Instead, it might look for less money but insist on a development with reduced commercial space and more community and open space.
Ongley suggests that such an argument misses the point of the tender system. “It is worth considering why Hong Kong’s land tender process works on a ‘highest bidder’ basis. It was not originally [implemented] in order to maximise revenue but to be a transparent process. If you sell to the highest bidder, then there is no opportunity for accusations of collusion or of the government being accused of handing land to favoured parties.”
He also argues that the developer who submits the highest bid will have to create a good project if it is to be commercially successful. “Surely,” he asks, “if someone invests billions in acquiring a site, they have the greatest interest in building the best development possible in order to get the best returns?”
Ongley also points out that the importance of Site 3 means it should not be used as a guinea pig. “If this site is as important as people say, then it should not be the first site for which the Hong Kong government tries a new method of selling land! Try it with a smaller and less prominent site first, he says.
An additional problem—not just for Site 3, but for all of Hong Kong—is that the city’s population has little faith in property developers, who are seen as profiteers from the city’s expensive housing market. Developers also tend to take the blame for doing things, such a cutting down trees and demolishing beloved buildings, that the government mandates.
This environment limits the potential for useful interaction among developers, public officials, and other stakeholders. “Developers cannot have a serious dialogue with the Hong Kong government because, in the eyes of the public, that would be seen as collusion,” Ongley says.
The development of Site 3 has been a long time coming, and there were fears that the Hong Kong government might simply put it out with the rest of the land tenders for 2018–2019, which were announced in March. However, this did not happen, so time may not have run out for those campaigning for change.
Brooke says, “If the government is to be so blinkered in its approach to the disposal of this key component of a holistic plan for the Central Waterfront, I think this will only serve to strengthen efforts and support for change, and as the Harbourfront Commission we can hardly turn our backs on the Harbour Planning Principles, which call for an integrated and sensitive approach to waterfront development.”
Regardless of how the project is tendered, the size and expected price of the site mean that only a limited number of developers could take it on. Hong Kong developers such as Swire Properties, Hongkong Land, Sun Hung Kai, and Cheung Kong are sophisticated players with deep pockets, while major global developers such as Lend Lease also would have the capability. Brooke notes that “it is a large site and significant capital will be required, which will limit the field. The lack of a residential element will rule out certain developers. It is a flagship project that will entail long-term ownership, so that brings us down to a small number of local and overseas developers.”
It is perhaps worth noting that Hong Kong’s current planning and development system produced a harbourfront skyline that is recognisable around the world, just like the skylines of Sydney or New York City. That does not mean, however, the city ought to rest on its laurels.
“Comparisons to other waterside developments around the world are all very well,” Ko says. “But we want something that is better than elsewhere, something that’s never been seen before.”
This article appeared on page 48 of the Asia Pacific Issue of Urban Land, Spring 2018. ULI Asia Pacific will hold a workshop during the 2018 Asia Pacific Summit June 5–7 to engage global experts from its membership base and provide strategic advice to the Hong Kong government regarding the Site 3 project. The workshop will explore ideas about establishing a framework for a public/private partnership that allows the city, developers, and the local community to collaborate to ensure the quality of its design, uses, and public space.