January 13, 2005

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Somewhat lost after Tung Che-hwa's speech was another far more interesting piece of testimony. It was Sir David Aker-Jones' turn to testify to Legco over the Discovery Bay debacle (you can read some background here). It was quite some testimony. The zoning changes that lead to massive windfall gains to the property developers without them having to pay any land premium to the Government was due to a fear of Disco Bay turning into a Russian listening post. This fear cost precisely HK$160 million in foregone revenue. We can be generous and say there may have been security concerns. One can't help but feel there were better ways to deal with the problem than letting developers change the nature of the project. Except in Sir David's eyes the project didn't change:

Akers-Jones contended that, even today, there has been no fundamental change in the nature of Discovery Bay. "It follows principally a resort development,'' he said, adding that even though resorts such as Miami and Cannes also contain substantial residential components, they can still be considered as resorts.

As to the decision in 1985 to allow the developer to build residential instead of hotel and commercial buildings, Akers-Jones said: "A discussion between reasonable men would not require a developer to build hotels if no one was going to stay at the hotels.'' Similarly, decisions to allow the developer to drop the construction of a promised public golf course in 1982, and a cable car system in 1985, were driven by the need for flexibility and pragmatism.

Discovery Bay is many things, but it is not a resort. It never has been. Clinging to this notion would be quaint if it hadn't cost HK taxpayers so much money. At least we now know the key to making money in HK property. Plan to create a resort, borrow the money from the Russians, actually build a residential community and stir. Easy.

posted by Simon on 01.13.05 at 01:04 PM in the


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