Bo-sin Tang

Market structure of the construction industry in Hong Kong

This study examines the market structure of four different sectors within the construction industry in Hong Kong. Market concentrations, expressed in terms of Herfindahl-Hershamann indices (HHIs) and number equivalents (HNEs), are calibrated for the top five contractors and compared with those of the local property industry. The study reveals the following ascending order of market concentrations: private building, public building, property development, and civil engineering. Our explanation is that technological and capital requirements have imposed a strong barrier to entry into the civil engineering sector, resulting in a concentrated market. Conversely, the lack of technological demand and supply in the private building sector has led to easy market entry and exit. Building contractors thus compete intensely on cost reduction rather than technology improvement, leading to poor construction safety and product quality. The paper concludes that the Government, being a major client of construction works and regulator of the industry, can assume a more active role in promoting the overall competitiveness of indigenous local contractors in Hong Kong.

Density control and the quality of living space: a case study of private housing development in Hong Kong

Abstract The increased concentration of urban populations is a global phenomenon. Hong Kong, like many Asian cities such as Singapore, Tokyo, and Shanghai, is famous for its compactness and high-density living. This paper argues that Hong Kongs floor area control mechanism has a major adverse effect on the development potential of private housing, and more importantly on the quality of living space. Private residential buildings are built in accordance with statutory requirements imposed by the government. Under the current system, private developers attempt to maximize the usable floor area efficiency at the expense of common area. Consequently, building layouts generate the maximum number of housing units clustered around a cruciform, high-rise compact core. The built form does not take adequate consideration of living quality issues. Its undesirable impacts notwithstanding, the dense cruciform floor plate design is now widely replicated in many mainland Chinese cities. This paper argues that, although such a built form appears modern to some city dwellers, it is a direct result of an outdated density control mechanism that fails to meet present day requirements. A review of this mechanism should be undertaken, and this paper suggests some possible solutions to strike a balance between dense living and a better environment.

Development control, planning incentive and urban redevelopment: evaluation of a two-tier plot ratio system in Hong Kong

Abstract Recent urban policy in western cities is directed towards urban entrepreneurialism, private sector participation and making developers pay for planning gain. Land development control strategy is formulated accordingly to reflect these themes in rejuvenating inner city areas. This paper evaluates the effectiveness of a new zoning incentive (two-tier plot ratio system) in Hong Kong. The conclusion is that it did not achieve the stated objective in increasing private sector site amalgamation for new urban housing redevelopment. Main reasons include planners’ neglect of market viability issues, geographical mobility of property development capital, and incompatibility of this incentive with other development control measures.

Modelling planning control decisions: a logistic regression analysis on office development applications in urban Kowloon, Hong Kong

Abstract Planning control decisions are often characterized as results of a complex deliberation process that involves consideration of many factors. This exploratory study uses logistic regression to investigate whether it is possible, based upon a small number of quantifiable variables, to correctly predict the past decisions on 162 planning applications for commercial-office development in urban Kowloon of Hong Kong. Our final quantitative model identifies four key factors that can explain up to 77% of the decisions, but none of these factors are included in the formal planning guidelines. This study suggests the need for further research into the local planning control decision making process, particularly in relation to the issues of certainty and flexibility, the relationship between planning and market, and interaction between policy and decision.

Institutions, Property Taxation and Local Government Finance in China

China’s rapid urbanisation has prompted its government to explore new sustainable sources of public revenue to finance the continued demand for urban infrastructure and services. Property tax advocates have sought to take advantage of the real estate booms that have occurred since economic liberalisation by actively campaigning for a real property levy as an appropriate policy choice. Against this background, this study evaluates the prospect of implementing market-value-based property tax reforms in mainland China. Based on the new institutional economics perspective, it posits property tax as an institutional arrangement which requires complementary mechanisms in land registration, property appraisal, tax administration, social security and dispute resolution. Property tax reforms would not only necessitate technical changes, but would also have extensive social, political and legal repercussions for Chinese society.

‘Submarines don’t leak, why do buildings?’ Building quality, technological impediment and organization of the building industry in Hong Kong

Abstract This paper addresses a naive question: why do the new housing units in Hong Kong always leak? Conventional responses to this question, including slack construction supervision, poor workmanship, low construction cost, tight building schedule, are only superficial answers. This study addresses this question within the context of technology development and industrial organization within the house-building industry. The local building industry is notorious for its poor use of automated technology. This is reinforced by the existence of a fragmented industry that relies widely and increasingly on the use of subcontracting and procurement of labour services. Low technological applications in the house-building industry are further institutionalized by the practices of local developers, university educators and the government. This study explains why an off-site, assembly line mode of mass production of buildings cannot take off, and why the assembly work has to rely on human dexterity rather than technological precision. It is argued that the relationship between technological impediment and fragmentation of the building industry results in a vicious cycle. Unless this structural relationship is broken, poor building quality and technological backwardness will continue to linger in Hong Kong.

Property Agents, Housing Markets and Housing Services in Transitional Urban China

This study examines the particular role, services and functions of property agents in the housing markets in mainland China. Since the implementation of housing market reforms, cities on the Chinese mainland have transferred from a centrally-directed, welfare-oriented housing system to a more decentralized, market-based one. Commodification of housing has expanded the opportunity of new market intermediaries to service the growing urban housing markets. Yet there appears to be little research on these agents, which bear similarity in name, but not exactly in operation, to those in a market society. Based upon insights from new institutional economics, this study examines how the existing institutions in China have constrained and facilitated their services in the housing transaction process. This micro-analytical study provides a different means towards understanding the market transformation of a socialist housing system.

Private space, shared space and private housing prices in Hong Kong: An exploratory study

Abstract This exploratory study examines the relationship between internal space, shared space and private housing prices. Housing floor area is an ambiguous concept in Hong Kong because it covers a possible exaggeration of the amount of ‘private space’ exclusively enjoyed by the owner and an unidentifiable portion of ‘public space’ shared with other owners within the development. Using hedonic pricing models, this study has found that different distributions between private and shared space command different values from the housing buyers. Shared communal space generally exerts a downward pressure on housing prices. The buyers are willing to pay more for the private space and some desirable forms of communal space. A higher willingness-to-pay for the desirable attributes such as clubhouse indicates that the Hong Kong people are increasingly concerned about the quality of living space in the built environment. This study suggests a need of further research into the exact measurement and the different forms of housing space rather than simply taking the stated floor space figures for granted.

GIS-Based Framework for Supporting Land Use Planning in Urban Renewal: Case Study in Hong Kong

AbstractLand use planning plays an important role in achieving sustainable urban development. One of the problems planners frequently encounter is the absence of an integrated quantitative approach to assessing land-use suitability and supporting land use planning (site level), particularly in urban renewal. This paper develops a geographic information system (GIS)-based framework to solve this problem. The framework consists of three main modules: land information database, planning/policy control mechanism, and model of land-use suitability analysis (LUSA). In the process of developing this framework, three tasks are completed. First, key factors affecting land-use decision making in urban renewal planning are identified and 20 of them are quantitatively examined from five perspectives of land attributes: inherent/physical, locational, social, economic, and environmental. Second, two submodels, namely, the criterion-value generation model and suitability assessment model are designed and built for LUSA ...

Optimal site area for high-density housing development

Abstract This study provides an empirical assessment of the optimal site area for master-planned high-density housing development in Hong Kong. Conventional hedonic pricing methods are not used because they cannot separate the amenity value of large sites from the price effects caused by market power. We obtain our estimate from a unique data set containing the choice of applicants for public housing units in 128 housing estates in Hong Kong between 1990 and 1998. An inverted U-shaped relationship between site area and popularity of the estate is revealed. We conclude that the land areas of most public housing estates in Hong Kong are sub-optimal. Our estimated optimal site area serves as a quantitative benchmark for the government in its future disposal of public as well as private housing land.