Dec. 6 (Bloomberg) -- Hong Kong will lose talented workers and struggle to attract foreigners to the city as small spaces detract from its living standards, Chief Executive Leung Chun-ying said today.
“We need to have adequate land supply not just to meet new demand, but also to give people more elbow room in their living space and their work space,” Leung told a lunchtime address.
Home prices in Hong Kong, the world’s most expensive place to buy an apartment and to lease commercial spaces, have doubled in the past four years on near record low mortgage rates and an increase of buyers from other parts of China. That prompted the government to introduce measures such as tightening mortgage lending and increasing land supply to rein in prices.
Hong Kong needs to make hard choices about the use of land in the city, including how much of the countryside it wants to keep, Leung said.
“If we cannot, within the space of the next two or three decades, increase the space that’s in Hong Kong, the best and the brightest of the next generation will leave us,” he said.
About 32 percent of the more than 1.1 million private housing units in Hong Kong are smaller than 430 square feet, with another 49 percent between 431 square feet and 752 square feet, according to figures compiled by the government’s Rating and Valuation Department.
His comments today echoed those by officials in Singapore. The city-state last month capped the number of homes that can be developed outside the city’s central area to curb the building of so-called shoebox apartments, or those smaller than 50 square meters (538 square feet).
Leung, who took over in July, has pledged during his election campaign to bridge the city’s widening wealth gap and make housing more affordable to the general public.
Since taking over, the former surveyor has imposed three rounds of major home price curbs, including imposing an extra 15 percent tax on buyers from overseas, including mainland China. In the past month officials, including the city’s central bank chief, have signaled it won’t rule out additional measures.
Under Donald Tsang, Leung’s predecessor, the government capped the size of units on most of the land it sold to developers over the past two years, as it sought to increase new apartment supply to help curb prices.
“It’s a real dilemma the government faces,” said Buggle Lau, chief analyst at Midland Holdings Ltd. “On one hand they try to bring down sizes so more people can buy at more reasonable prices. At the same time you have these tiny units that are really hurting people’s desire to live here.”
Leung, who has been criticized by lawmakers over alleged illegal structures built at his properties, also pledged today he will focus on improving the city’s roadside air quality.
“The priority over the next five years is air quality,” Leung said. “Within the next 12 months you will probably see government initiatives dealing with commercial vehicles, which are the main source of roadside air pollution.”
Hong Kong’s polluted air causes more than 3,000 premature deaths a year, according to the Civic Exchange. The research group said in a statement on Jan. 12 that 49 million doctor visits “can be attributed to Hong Kong’s persistently poor air quality” since 2005.
Leung was speaking at a luncheon at the city’s Foreign Correspondents’ Club.
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