Sustainable Living Hong Kong

I guess the answer to the question in the last post – whether Hong Kong’s bureaucrats are ready for new thinking and new standards to cut our carbon emissions – is a definite “No”.

The award of a design-build-operate contract for the Kai Tak district cooling system, originally due in January this year, has been scrapped as tenderers have all priced the risk more than the benefit of taking on the project and returned tenders that the government considered too expensive.

As a result, it has been forced to make a few changes to its procurement approach. It is now assuming responsibility for the capital cost of laying the pipes for the chiller plants, leaving the prospective contractor with just the responsibility of designing the system, building the plant rooms and operating the system for eight years, with an option to extend the period by another eight.

And whereas it had insisted in the past that private sector users would be free too choose whether or not to sign on, it is now considering making it compulsory for every building in Kai Tak to use it, with stipulations in land lease conditions being one approach under consideration. The reason given for the change of heart was environmental protection and energy efficiency, but it would be obvious to industry players that this is the only realistic way of reducing the risk of the system failing to make a healthy return within the franchise period.

There is in fact another way of reducing the risk and enhancing the system’s profitability: by allowing the operator to sell electricity generated by the system as well. But this is not contemplated because electricity supply in Hong Kong is provided by the two electricity companies, and that’s it. In other parts of the world people have the incentive to improve energy efficiency and adopt renewable energy because local districts are allowed to develop small-scale cogeneration systems or standalone installations capable of generating surplus electricity for sale back to the grid. In Hong Kong, though, even solar panels have to be installed and run by the two electricity firms; if you install solar heaters on your roof, you run the risk of the Buildings guys prosecuting you for erecting an illegal structure.

The district cooling system is a good idea that can be even better, but institutional rigidity has proved too hard to surmount.

Green Sense is inviting Hong Kongers to do without air-conditioning for one night (Wednesday September 29) to reduce our carbon emissions.

The idea is to switch off from 7:00 pm on Sep 29 to 7:00 am on Sep 30, and the universities plus a number of organisations have already agreed to back the campaign by calling upon 20,000 families and 5,000 students who live in dormitories to participate.

According to Green Sense, air-conditioning accounts for 60% of our energy use during the summer months of July and August. It estimates a 1hp air-conditioner that consumes 0.8-1 kWh of electricity running continuously for eight hours generates 5.6 kg of carbon dioxide.

With any luck, the weather will have cooled a bit by then so participants will find it easier to cope without air-conditioning, but climate change has been getting so bad so quickly the weather doesn’t cool till we’re well into November or even December these days. At the same time, increasing development density and the wrong building codes (the Overall Thermal Transmittance Value requirement leading to curtain wall buildings that reflect heat onto streets) have created urban heat islands that force people to turn to air-conditioning for relief. Worse yet, people have become used to Arctic air-conditioning thanks to routine excessive use at home, in the office, on the bus and in the shopping malls.

The NGO calls for people to switch to more energy-efficient air-conditioners, but will this be enough? It’s time for Hong Kong to rethink building services so that, instead of separate systems – and standards – for air-conditioning, hot water, etc, there are integrated systems capable of recovering heat from air-conditioners to heat water, for example. Or micro-hydro plants that capture the energy from water and wastewater flowing in and out of tall buildings to generate electricity. Are our designers and bureaucrats ready for this?

Lau Wong Fat, Executive Councilor, Legislative Councilor, Tuen Mun District Councilor and Heung Yee Kuk representative, has accumulated agricultural land and village rights in the western part of the New Territories and is now for the third time trying to gain Town Planning Board approval for a massive development.

The development is not for the benefit of villagers in need of a home for family members, but simply to make a buck out of luxury residential property smack in the middle of another area of untouched beauty in Hong Kong. Like Sai Wan, approval of this application will promote similar attempts in other protected or sensitive rural areas.

Click here to submit your views on Pak Nai to the Town Planning Board before midnight August 27. The development proposal has no merit: there is no social or economic pressure to warrant this development which is completely inappropriate in relation to the zoning intentions, irrespective of the un-bankable protective proposals it has included:

1. The agriculture land is specifically designated to “retain and safeguard good quality agricultural land/fish ponds for agricultural purposes”.
2. The area is part of a rural landscape surrounded by a Coastal Protection Area “intended to conserve, protect and retain the natural coastlines and the sensitive coastal natural environment”.
3. Cost of public infrastructure including road widening and re-alignment of planned routes required would be enormous, and disproportionate to the planning gain.
4. 70% of the application area is part of the Ha Pak Nai Archaeological Site with important historical remains confirming “the position of Hong Kong in the history of Chinese culture” lies in the centre of the proposed development. For this reason, the site was previously deemed unsuitable for the Integrated Waste Management Facility.
5. Development will have considerable impact on the Deep Bay Water Control Zone;
6. The habitats supporting horseshoe crabs, including spawning grounds, a nursery crèche for juvenile horseshoe crabs and adult foraging grounds will be impacted;
7. The sea-grass beds, the largest in Hong Kong, are extremely vulnerable to pollution, particularly land runoff and siltation from soil erosion during development and from road run-off;
8. Two egretries, including the largest Little Egret breeding colony in Hong Kong, owe their existence to the solitude of the area;
9. The streams and intertidal mudflats are foraging grounds for Black-faced Spoonbills in the winter months. The slightest disturbance and these shy birds will flee.
10. Previous ecological assessments for the Deep Bay Coastal Road remain valid. Development will bring serious ecological impacts to coastal and off shore areas of high ecological value, destroying habitats and fragmenting and disturbing the remainder. Disturbance and water quality changes, will impact horseshoes crabs, breeding herons and egrets. The only mitigation measure is avoidance of construction and development all together.

Protection and conservation measures required

The application for an OU(RU) “other uses (rural uses)” zoning is misleading as it disguises a Comprehensive Development Area application. The Town Planning Board should reject this application and put in place protection measures of this area and the nearby coastline. A comprehensive environmental impact assessment should be carried before any rezoning for development is considered, and any development should be considered to be a Designated Project under the Environmental Impact Assessment Ordinance.

Hong Kong’s civil society is quite alert to the scams perpetrated by the government but, alas, also prone to being co-opted.

The government now knows the trick by heart. It works like this: when the public objects to a project, it would pick a detail or two of the criticism to do a bit of work on and offer a “public consultation” on its “response”. Once the “comments” are in, the government will then go ahead with the scheme, saying how it reflects public “aspirations”, or whatever. We may then stutter, angry at having been tricked, and yell about fake consultations at the next protest, but it works every time.

Remember how the public objected to the waste of taxpayers’ money on building a grandiose government office block on a prime waterfront site, on land reclaimed from the harbour? The government picked on the objection to obstruction of visual and air flow and promised to reduce the height of the building and ensure ventilation, then staged exhibitions of the revised submissions from the architects, with multiple choice comment cards: you could pick A, B or C, but you couldn’t say the whole idea of wasting all that money was wrong-headed in the first place. Checkmate.

What about the proposal to reclaim more land from the harbour to build another expressway? The public objected to the Central-Wanchai Bypass, with the more knowledgeable pointing out that it’d been demonstrated everywhere that more roads meant more cars and calling for the introduction of electronic road pricing. But the government picked on the objection that the waterfront should be a public amenity and not a road for speeding cars, and offered a choice of two options for a landscaped ventilation building for the public to choose from. It would probably get away with it too, except that this time it’s not so much the public but the developers behind the IFC that are upset about their expensive investment being blotted by this eyesore standing between their building and the harbour.

And now the West Kowloon Cultural District. I still remember the uproar that greeted Norman Foster’s initial design and trudging up the steps of the Fringe Club to view the alternative proposals put forward for enlivening the cultural landscape of the whole of Hong Kong, by having three key centres of cultural activities on both sides of the harbour. It made sense: after all, the Royal Opera House, V&A, Tate Modern, British Museum, National Portrait Gallery, etc etc, aren’t all located at the Barbican Centre. They’re scattered all over London. And they were built on the foundations of a culturally informed city where Paul McCartney could busk (in disguise) in the Tube and jugglers are free to amuse themselves as well as spectators without being arrested by the police, as one was in Hong Kong recently, just before the government went ahead with a “six-month pilot scheme” to promote street performances, something artists and entertainers in London have been doing since at least the 19th century.

But instead of heeding the cry against this gigantic waste of public money, the government’s at it again, focusing on the objection to the real estate element in the initial design in order to push through with the legacy-obsessed concept of creating a cultural ‘destination’. Having got three big-name architects to come up with fancy proposals articulated with appealing spiel about ‘connectivity’, ‘diversity’, ‘inclusiveness’, etc etc, it now wants the public to effectively endorse the waste of money by visiting the exhibitions of the proposals and picking their favourites.

I have just a couple of questions: what do the government and the three architects know about climate change? How much carbon emissions will be generated by the construction of the West Kowloon Cultural District? What is the purpose of the cultural district: to serve up cultural events as consumer products for the elite, or to foster the creativity of the general public?

Climate change is likely to impose worse impact by the time this project was completed. Look how food prices have risen as a result of the flooding in China and the wild fires in Russia; when ordinary Hong Kongers can’t cope with food price inflation due to climate change, will the government say: let them eat cake while we build this edifice?

With all the discussion about property prices and the many problems it spawns – such as the rising gap between the rich and the poor, mental illness and overwork from living in pint-sized apartments and spending hours in a metal tube getting to and from work, disillusionment amongst youth at the prospect of never owning their own home—it is worthwhile to step back and ask:  just how bad is the situation?  Is it all huff and politicking, with various interests using property as a way to advance their own agendas?

It’s always a good idea to start with facts.  The  Economist looks at “fair value” of property in major economies, which is based on comparing current ratio of house prices to rents, with its long-term average.  In other words, this will tell us how much the current situation is out of line with the long term.

The chart shows that prices in Hong Kong have risen the 2nd most globally on a year-on-year basis, exceeded only by Singapore.  But on a fair value basis, Hong Kong’s property is extremely overvalued, again ranking 2nd.  Hong Kong’s fair value reading is 53.6, with 0 being fair value, i.e. Hong Kong property is at 53.6% above its fair value.  And despite the much reported rise in Singapore property prices, prices are just 20.3% above long term trends.

We already know that Hong Kong’s residential property prices are already among the world’s highest—exceeded only by Monaco and London. What the Economist chart tells us is that things are getting worse, and that we are hitting the extremes of our own trends.

But this is not a “political” blog; so does it have anything to do with sustainability?

One of the keys to a sustainable society is that its citizens feel that what they give is justly in line with what they get, or at least that they have the prospect of reaching such a stage; and that the economic and ecological products of this relation can be sustained over time.  So long as high property prices end up disenfranchising more and more people, we should “call a spade” and say that the trend is unsustainable.

Hong Kong’s double whammy is that most of the building are also environmentally unsound in construction and operation, while producing no economic benefit to society at large (though they do produce profit for a small number of operators).  We need both environmental and economic sustainability.  In Hong Kong’s property market, we get neither.

The South China Morning Post recently discovered that the largest developers are getting bigger and cornering the market for new flats (see an extract of the original article here). Although the article is hardly news to the large numbers of Hong Kongers who work hard, pull down a good salary, and still can’t buy a decent-sized flat, it is nice that it is given such prominence – a front-page billing–  since it does stand as stark evidence that the government’s effort “to respond to the aspirations and the needs of our citizens” is yielding limited results and may even be counter-productive.

Today the paper followed up with an editorial in which it analysed the situation correctly, in that our high property prices are due to the government’s land policy but which produces high property prices which then cascade through the rest of the economy and function like an indirect tax on the population.  The editorial also mentions that the government’s land policy also places disproportionate power (and profits) in the hands of the real estate sector.

As a solution, the SCMP proposes that the government increase the supply of land and sell it off in smaller parcels, thereby enabling more developers to bid to create competition in the property market. Here I realised that the SCMP should just stick to news. Does anyone really believe that the smaller property firms are less single-minded than the larger firms?  If anything, the smaller firms would have less “reputation” at stake and would therefore be more likely to cut corners, renege, and generally engage in unsanitary behavior.   That explains why China chooses to close 2000 small mills and steel plants, rather than persuade them to abide by national policy when they lack incentives and resources. Consolidation can actually clean things up.

In essence, property developers operating under a single fixed framework will vary only incrementally in their actions. It’s like arriving at the airport in the US and seeking a rental car.  There are 10 firms, but surprisingly, they all offer more or less the same package because they operate under the same framework and conditions.  Would adding an 11th or expanding counter space change the nature of the game? Buyers probably would not notice the difference.

Without changing the policy framework and rules of the land policy, expanding supply and changing the nature in which it is sold off will have only a marginal impact on the pricing and availability of flats. Solutions to this problem will only come by admitting that the current system does not provide for the “aspirations and needs of our citizens” and then fixing it, both from a supply and demand point of view, while not undercutting those who have already become homeowners.

First up must be to end the high-land price policy — gradually – and for the government to fund itself from sources more common for an advanced industrial society, namely income.  Having to pay more income tax isn’t as bad as it sounds:  if you only had to pay 15% of your income on housing, rather than 35%, wouldn’t you be glad to cough up a few extra dollars for the government?  First, you would end up ahead. Second, the government is actually obliged to do something useful with the money, whereas the property developers just pocket it as profit. So those gains come back to you indirectly.

Second must be to force speculators to pay the social costs of their speculation – in the form of tax on short term flipping (meaning less than 3-5 years) and greater rights for tenants.

Third would be to end the biases in government which have produced policies that further entrench the power of the real estate developers, such as the Urban Renewal Authority partnership programme, the mainland investors scheme , and the like.

It seems that enough people in positions of power know that the current land/property system is failing.  The key is whether they will have the political will to overcome vested interests, and do what is right for the majority of people in Hong Kong.

What is the social and economic impact of Hong Kong’s housing policy? Should we build smaller to be more affordable, or are we already too small? Does the Home Ownership Scheme work? In a city where 50% of residents live in public housing, the government is now gathering views on whether or not to subsidise home ownership.

Join a public forum on “Who can afford housing in Hong Kong?”

Date: 7 August 2010 (Sat)
Place: Fringe Club, Central
Time: 10:00 am-12:30 pm
Enquiries: 2521 7251 or boxoffice(at)hkfringeclub.com

Speakers include Duncan Pescod, Permanent Secretary for Housing; SCMP columnist Jake van der Kemp; Civic Party legislator Alan Leong; Pro-Commons vice-chairman Kenneth Leung; and PolyU economist Dr Lam Pun Lee.

The property tycoons want to bite back.

Fed up with negative coverage of their wealth-siphoning activities, one of them – the one who got so much flak over the Hung Hom peninsula saga and the subsequently aborted hiring of a former Buildings Department chief – wants to buy a newspaper so he can get the press to say what he wants them to say.

One shouldn’t be too alarmed perhaps, since the Hong Kong Daily News is already owned by yet another tycoon. But if reports are to be believed and the tycoon plans to turn it into a free tabloid, then civil society had better be prepared for this manipulation of public opinion.

My jaw dropped recently at a presentation about research commissioned by the Climate Change Business Forum, about how buildings can be designed to generate its own electricity and be more energy-efficient. Apparently the research has the support of the Real Estates Developers’ Association, as one of the first slides indicated.

This isn’t surprising if we’re talking about commercial buildings that they build for lease, as they will save operating cost by adopting such technologies. But ordinary residential buildings that they sell at outrageous prices? The only plausible explanation, it seems to me, is that, realising the developers will not implement measures to cut the energy consumption of their buildings when left to self-regulate, the government has finally introduced mandatory building energy codes. And now that they’re forced to spend more money to improve energy efficiency, they’re only too happy to take credit for it.

For more positive news of what the tycoons get up to, wait for the new Hong Kong Daily News.

The Commerce and Economic Development Bureau (CEDB) has just started a public consultation on potential legislation to enhance consumer protection.  To enhance consumer protections, the Department proposes that under new legislation (for consideration in 2010-2011), unfair trade practices such as “bait and switch”, misleading omissions, aggressive sales tactics, and phishing (collecting money with no intention to deliver service) be prohibited and punishable by law.

Great ! you say.  With so much supposed pressure on property developers to be honest, one might be forgiven for thinking that the government is finally backing its rhetoric with the force of regulation.

Wrong again. The mooted legislation has already excluded finance, property development, and professional services – three of the most egregious offenders of the above tactics—from consideration, with the supposed excuse that these sectors are otherwise regulated by statutory bodies.

What justifies an exlusion a priori?   If the above tactics are so bad, shouldn’t they be punishable and forbidden across the board regardless of which department is responsible for enforcement?   And if those statutory bodies are doing their jobs, these unfair practices shouldn’t be allowed at all, and so forbidding them in another legislation would not really make a difference or add to anyone’s workload.

Or is this simply another vehicle that can be used to fry the small trader, while much greater offenses are quietly settled and suppressed after months of “investigation”?

Submit your views to the CEDB by October 31 by post (to Level 29, One Pacific Place, 88 Queensway, Hong Kong), fax (2869 4420), or e-mail (cpr@cedb.gov.hk).

Speaking of the land of the ruling class, hot on the heels of its Island Crest project, which has successfully sterilised a low-rise community on First Street, the Urban Renewal Authority is now inviting tender to do the same further up the hill in Sai Ying Pun.

Expressions of Interest are being invited by the URA for the joint development of a 23,143 square-feet site on Third Street that is expected to yield 177,175 square feet in total gross floor area. The development will provide about 270 homes, of which a large number will be smaller than 500 square feet. So, assuming a generous apportionment of usable space of 79% per flat, each of these flats will have less than 400 square feet. Put in a partition or two, and you’d better be a Lilliputian to be comfortable in it.

And if Island Crest is any indication, expect all community street life to be wiped away in one fell swoop. In place of the old neighbourhood stores are imposing pillars that lift the development above other buildings in the area – for the view of course – and give it an air of gentility without a hint of humanity about it. And for that, buyers must part with HK$14,000-18,000 per square foot – no doubt the kind of return URA looks to reap with the new project, the community be damned.