Hong Kong’s $28.6bn project: Villages make way for new homes, logistics hubs and tech city
Hong Kong has begun clearing land for a massive Northern Metropolis development that will transform villages, farmland and wetlands into housing, logistics and high-tech projects, with the government estimating the project will cost at least HK$224 billion ($28.6 billion).The project has already entered a key phase. Last month, the first large-scale land sale in the Northern Metropolis was awarded to a consortium of six companies, including Chinese state-owned enterprises and e-commerce giant JD.com. The consortium plans to develop housing and a logistics centre in the area.The development is expected to eventually cover about 30,000 hectares (74,000 acres), roughly a third of Hong Kong. Authorities say it will accommodate around 2.5 million residents and create 650,000 jobs.For property developers, the project represents one of Hong Kong’s biggest new land and infrastructure opportunities. For residents of the affected villages, it means losing homes and communities that have existed for generations.Chan Yuk-tong, 71, is among those being displaced. He had hoped to spend his remaining years in the small blue-brick houses where he was born and raised. His ancestral home is now due to be demolished.“I can’t bear to leave… If not for the government developing this area, I would likely spend the rest of my life here. After all, I belong here,” Chan told AFP as he packed up belongings in his yard.
Housing, logistics and a new economic centre
The Northern Metropolis was announced five years ago as a major urban expansion project. It is designed to create a new economic centre in Hong Kong’s northern New Territories, close to the mainland Chinese border.The development will include residential areas, logistics facilities and high-tech clusters. It is also intended to strengthen Hong Kong’s links with Macau and nine mainland Chinese cities that form the Greater Bay Area.The government has described the project as a “new economic engine”. It expects the development to eventually contribute about 13% of Hong Kong’s GDP, based on estimates cited from banks over a roughly 20-year period.The final bill, however, could be significantly higher. While the government estimates the cost at HK$224 billion, S&P has put the potential cost at more than HK$360 billion.That has raised questions over whether the expected economic and property gains will justify the scale of investment.“Do we need to build it so big? Is it too ambitious?” said Brian Wong of Liber Research Community, an NGO focused on land issues.
Land acquisition comes at a social cost
At least 25 villages are expected to be demolished to make way for the project, according to Liber.Government departments told AFP they want to integrate rural areas into the wider development. But they said Chan’s ancestral houses did not have enough cultural significance to warrant preservation.Niki So, 42, is another resident affected by the redevelopment. Her family had lived in the village for three generations. She received a public housing flat as compensation, but said she would miss a community where neighbours had become like family.In July, dozens of Lands Department officials and police entered her village and declared the area government property.“I hope the development here will go well, that it will thrive,” So said.“If it doesn’t turn out as expected then I think the sacrifice of this village would be quite unfortunate.”
Mainland companies seen as key to property demand
The Northern Metropolis is also being positioned as a bridge between Hong Kong’s property market and the wider Greater Bay Area economy.Hannah Jeong of commercial real estate firm CBRE said mainland Chinese companies are likely to be among the first to take advantage of the government’s support for the area. They could establish research centres and benefit from Hong Kong’s tax regime, talent pool and access to data and capital.“With that flow, more manpower coming in, talent coming in… forefign companies will also gradually (invest),” Jeong said.The strategy is aimed at building a high-tech ecosystem that can attract both Chinese and international businesses.Hong Kong, however, faces strong competition from established mainland technology centres such as Shenzhen and Hangzhou.“Less relevant for China’s national tech ambitions” than mainland powerhouses like Shenzhen, said Gary Ng, a senior economist at Natixis.Hong Kong’s advantage, he said, lies in areas such as international connectivity, university research and its deep capital markets.
Cross-border links key to success
The success of the property-led expansion will depend heavily on how easily people, businesses and capital can move between Hong Kong and mainland China.“The biggest hurdle to the Northern Metropolis’ success is how to maintain an efficient cross-border flow, and at the same time maintaining the confidence that the international community has in Hong Kong’s uniqueness”, said Wilson Chan, co-founder of the Pagoda Institute think tank.The project is part of a broader push to integrate Hong Kong more closely with mainland China. That process has accelerated since Beijing imposed a national security law on the city in 2020 following large pro-democracy protests.Steve Tsang, director of the SOAS China Institute, said the changes had reduced opposition to deeper integration.It “effectively put an end to the ‘one country, two systems’ framework that allowed Hong Kong a ‘high degree of autonomy’, so greater integration with the Greater Bay Area would logically follow,” he told AFP.For Hong Kong, the Northern Metropolis now represents both a huge real estate expansion and a long-term bet on a new economic corridor. For the communities being cleared to make way for it, the transformation has already begun.
