Treating the Symptoms - A Critical Review of ... - Civic Exchange

The setting up of the URA raises a broader question: whydo we need a URA in the first place? Why is the privatemarket unable to redevelop, rehabilitate, revitalise, orpreserve old buildings on its own? In Hong Kong, thereis a common assumption that buildings over 30 years oldshould be torn down, yet other cities around the world areable to make use of buildings for decades or even centuries.The answers lie in Hong Kong’s institutional context.Hong Kong’s peculiar system of land administration andurban planning has created an inefficient and distortedland market, where real estate development has becomean extremely capital-intensive activity with high barriers toentry. Real estate development in Hong Kong is dominatedby a very small number of large players, who are generallyunwilling to invest in older parts of the city because theyare less profitable than greenfield site development, whilesmaller players and individual owners find it prohibitivelyexpensive to conduct renewal themselves. The situation isone of market failure.The same institutional features which lead to market failurealso explain why Hong Kong has historically placed solittle emphasis on urban design. As a small, hilly territory,land would have been a scarce resource in Hong Kong inany case. However, its institutional set-up has artificiallyrestrained its supply to an even more extreme degree,making land extremely expensive and vastly intensifyingdevelopment pressures. The need to extract the maximumdevelopment potential out of a small amount of land hascome at the expense of good quality urban design. HongKong’s legislation and regulation of development, design,and historical preservation remain relatively rudimentary inlarge part due to these pressures.The formation of the URA did not address theseunderlying institutional issues. By directly intervening inurban redevelopment, the government is addressing thephysical symptoms of the problem rather than the causes.The following section will offer a brief outline of politicaleconomy and institutional context in which the URAexists. It is not intended to be a thorough treatment ofHong Kong’s land administration system, but to highlightthe ways in which it affects the problems of urban renewal.It will then consider the effects that the URA has on theland system in turn.23