Following is the opening remarks by the Secretary for Housing, Planning and Lands, Mr Michael Suen, at the joint special meeting of the Legislative Council Housing Panel and Planning, Lands and Works Panel today (February 17):
First of all, I would like to thank the Legislative Council for the speedy arrangement of this special meeting today so that the Government can explain in detail the background of the disposal of the Hunghom Peninsula Private Sector Participation Scheme (PSPS) flats. I must first of all emphasise that the Government's decision was made after thorough consideration. In light of the overall need to maintain the integrity of the housing policy, we have already taken into account the policy, legal and financial considerations as well as the lease restrictions.
I wish to reiterate three points. First, the Government has the responsibility to implement and follow through all the objectives and initiatives under its housing policy. When I first assumed office, Hong Kong's property market was in the doldrums, and the serious problem of negative equity had dealt a severe blow to public confidence. In November 2002, the Government announced its statement on housing policy to make clear its determination to fully withdraw from the market. We re-positioned our housing policy, and introduced a series of initiatives to stabilise the property market. In particular, we stated clearly that the Government would withdraw from its role as property developer, and would cease PSPS. At that time, we were well aware of the need to dispose of the surplus flats of the Hunghom Peninsula and Kingsford Terrace PSPS projects. In the light of the repositioning of the housing policy, the Government and Housing Authority (HA) then decided to conduct negotiation with the developers for lease modification in order to enable the flats held by the developers to be disposed in the private market. We have briefed the Legislative Council on this subsequently. I would like to point out specifically that the Land Grant provisions of Hunghom Peninsula were different from those of other HOS developments. The developer possessed the legal title to the flats and the land lease provided that the flats could only be sold to purchasers nominated by HA. Against the Government's housing policy and in view of the legal restrictions, the obligations of HA under the agreement could only be discharged through negotiation with the developer for HA to withdraw from its role as property developer.
Second, the negotiation with the developer took place from the beginning to the middle of last year in the midst of the very gloomy property market. The process was extremely difficult and both parties were unable to reach any agreement after months of negotiation. It was not concluded until last December in the presence of an independent mediator accredited by the Hong Kong International Arbitration Centre, with the modification premium agreed. We have thoroughly considered the financial implications. If no agreement had been reached eventually, HA, despite its stringent financial position, would have to pay $1.9 billion to the developers to buy back more than 2 000 flats of the subject development which cannot be disposed of.
Third, Hunghom Peninsula was developed in accordance with the approved Master Layout Plan and gross floor area. Its design and construction were in compliance with HOS specifications. Any redevelopment in the future would have to comply with the requirements of layout and floor area as stipulated in the original Master Layout Plan for the PSPS development. Prior approval from the Government is required before any changes can be made and a premium has to be paid.
The property market has shown initial signs of recovery recently and the negative equity problem has begun to ease off. Moreover, the public generally supports the direction of our housing policy. Being the Principal Official for housing affairs, I am obliged to maintain the integrity and credibility of the housing policy to demonstrate our resolution in its implementation. In handling the Hunghom Peninsula case, the Government has given due regard to the re-positioned housing policy and the need to balance public interests. We have now seen initial positive signs of our housing policy and the total asset value of the property market is increasing which in turn benefits the community as a whole. I hope the information we provide today can give Members a full picture of the entire course in reaching the agreement to facilitate your understanding of the Government's intention and its commitment to stabilizing the property market.
Ends/Tuesday, February 17, 2004