EXPLORING THE “PRECINCT DEVELOPMENT APPROACH” OF NORTHERN METROPOLIS

By Kathy Lee, Head of Research, Colliers

The development of the Northern Metropolis plays a crucial role in Hong Kong's medium to long-term economic and industrial transformation as well as land development. It is essential for the government to carefully consider strategies to attract high value-added industries and high-tech enterprises to establish a strong presence in the city. Timely action is of utmost importance in this regard. Ms. Bernadette Linn, the Secretary for Development has therefore mentioned in an interview in January 2024 that the government might take reference from successful experiences of Mainland China, for instance Taikoo Li, Xi'an, and consider developing medium to large scale projects in the Northern Metropolis through the “precinct development approach”, with New Territories North New Town, Lau Fau Shan and San Tin Technopole being the potential pilot sites.

Contrary to traditional tendering for individual commercial or residential projects, the “precinct development approach” is a tender awarding the formation and development of a comprehensive district-wide area consisting of residential, commercial and government public facilities to a developer, with the developer bearing the costs of the project The development will also be accelerated through public-private partnerships This allows holistic planning at the same time avoiding the case where residents have to be “pioneers” with the lack of commercial or auxiliary facilities after the occupation of residential projects, as seen in new development areas or private projects in the past.

In fact, Hong Kong has a long history of adopting this concept of city operation, including City One Shatin, Discovery Bay and Park Island. As part of the Shatin New Town development's reclamation project, the government issued an open tender, specifying that the developer must complete reclamation works and provide community facilities (such as schools) within a specified timeframe. The latter projects were developed by private developers through land exchange with the government. The Secretary’s proposal, which requires developers to bear the costs of road and public facility construction, shares similarities with terms observed in the government's public land sale program in recent years, albeit on a smaller scale.

The application of the “precinct development approach” in the Northern Metropolis large-scale project is certainly capable of accelerating the development process. However, considering the objective, scale and new concept of the development project, it is crucial for the government to carefully consider the qualifications of tenderers during the tender invitation and review process. This includes assessing their relevant experiences and alignment with the development project's vision of industrial transformation and innovative technology development. Such considerations may also serve to attract experienced and high-caliber overseas developers to participate in Hong Kong's development endeavors.

For the collaboration and governance framework, the market environment may fluctuate dramatically during the development of the Northern Metropolis, which is a medium to long term goal Apart from the traditional public-private partnership framework, successful overseas experience in project governance could be adopted in the project, such as applying the BID Model, in which key stakeholders such as key enterprises, local organizations and residents can participate in the planning process in addition to the government-led process of setting strategic objectives For instance, a Steering Committee consists of key stakeholders can be set up to contribute to the planning process in response to market demands and changes One-North, a Singapore innovation district with a scale comparable to San Tin Technopole, is an exemplar of the BID Model.

As for the selection of pilot sites, although the Development Bureau is still studying appropriate pilot sites, we believe that the completion of the San Tin Technopole, which will act as a driving force for the development of the new development area, is unquestionably the key, since the objective of the Northern Metropolis is promoting Hong Kong’s industrial transformation as well as deepening the exchange and cooperation in innovation and technology between Hong Kong and the Mainland. Considering the current economic environment, developers might be more conservative when it comes to large scale projects with long development cycles. The government may, however, adjust the land price in accordance with the pilot scheme and market environment, as well as splitting off smaller land units into development phases, to strike a balance between development needs and risks of developers.

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Kathy Lee Head of Research, Colliers