In the past two years, the Hong Kong Government (HKSAR) has set up the Task Force on Land Supply to deal with the acute land supply issue. However, the overall land supply strategy and land supply options that the members proposed has provoked much controversy in society, especially the reclamation project on the Lantau Island. Apart from those traditional and controversial ways in sourcing land, PropTech (Property Technology) which uses digital innovation is said to be a possible way to address the needs of the property industry. What role can PropTech play to solve this century-long problem?
By utilizing an array of technological methods, PropTech collects and analyses various land information. For example, composition, type, quality, location, infrastructure, transportation network, population density, nearby facilities, future planning, etc. Thus, the information cost as well as financial expenses on land search can be reduced accordingly. Take a British PropTech company as an example. It uses the local land policy as a database, along with aerial photography technology to establish an integrated platform that allows developers to carry out a clear and comprehensive site planning , make comparison, clarify land ownership, and refer to the surrounding infrastructure and facilities. PropTech not only can make the development plan become a more detailed one, but also reduce the cost in searching land.
In addition, PropTech makes good use of the blockchain technology which has been widely discussed in recent years. By definition, a blockchain is “a series of immutable records of data that is controlled and managed by a cluster of computers not owned by any single entity”. It can provide electronic authentication for each unit of land and aging urban buildings that are in urgent need of redevelopment. Relevant data includes land titles, transaction records, residence status, incumbrances, valuation etc. is secured and bounds to each other by using the chain principle. After a certain period of time, the accumulated data will form a large database. Owing to the fact that developers can extract the data they needed conveniently, it is no doubt that the blockchain technology can play a significant role in lowering the information cost in real estate redevelopment and development projects, plus the transaction cost. It can result in less expensive land prices.
Speaking of blockchain, based on one of its characteristics which is decentralized, the author once discussed with Professor Chau Kwong Wing who is a member of the Task Force on Land Supply to combine the blockchain technology with the "Land Bonds" proposal that he conducted. In fact, there are farming plots scattered all over the New Territories which are owned by different private parties. Through issuing land bonds by government in exchange for those privately owned land, including idle agricultural land held by various major developers and Tso and Tong lands (commonly known as ancestral land) of the indigenous villagers, more land can be released for development purpose. With increasing land supply, it is believed that the land shortage problem in Hong Kong can be alleviated in the near future.
Leo Lo 盧銘恩
CEO of Fonto Holdings and Founder of Asia PropTech