RICS Recommends Monetised Land Exchange Certificate for North East New Territories' New Development Areas

HONG KONG, Dec. 3, 2012 /PRNewswire/ -- In response to the government's public consultation on the North-east New Territories New Development Areas (NENT NDAs), Royal Institution of Chartered Surveyors (RICS) has recently consolidated members' feedback and submitted recommendations on the proposed NDAs. RICS proposes a new option in resuming land in the NENT area - Monetized Land Exchange Entitlement Certificate (provisionally called Letter M) - for the government's consideration.

Under the Letter M, landlords instead of receiving cash will surrender land on a voluntarily basis back to the government in exchange for a certificate which gives them a right to purchase future developable lands within the same district. This mechanism encourages private landowner's participation, facilitate land acquisition, and expedite New Town development.

A similar system (Letter B) was used prior to 1997 in resuming land in the New Territories.  RICS recommends the government to adopt a slightly different approach with the following conditions:

1. It can only be used as cash to purchase future developable land or pay modification premium within NENT;
2. There is no land exchange ratio in the Letter M, thus the Government has no accumulation of land debts;
3. At the time of issue it will have a face value equivalent to the then Government land compensation rate, but when it is used as cash for land premium payment, its value will be equivalent to the Government land compensation rate at the time of redemption.  This mechanism will allow its value to appreciate with the market value of agriculture/building land in the New Territories.  Alternatively its value can be linked to a recognized property index;
4. To control its volume in the market, there is a last redemption date and a Government buy back option;
5. Only Letter M holders can participate in future land sales by way of auction or tender within NENT;  and
6. It can be, subject to HKMA regulations, treated as a securitized product which can be traded in a secondary market;

RICS Hong Kong Board member Dr Albert So, said, "From landowners' point of view, Letter M is better than cash compensation as it can appreciate in value, allows its holder to participate in future land auction / tender, and is tradable in the secondary market. From Government's point of view, Letter M will facilitate land acquisition, avoid accumulation of land debts, allow developable land to be sold by auction / tender at market value, and is redeemable in the market."

About RICS & RICS Asia

RICS is the world's leading qualification when it comes to professional standards in land, property and construction. In a world where more and more people, governments, banks and commercial organisations demand greater certainty of professional standards and ethics, attaining RICS status is the recognised mark of property professionalism.

Over 100 000 property professionals working in the major established and emerging economies of the world have already recognised the importance of securing RICS status by becoming members.

RICS is an independent professional body that since 1868, has been committed to setting and upholding the highest standards of excellence and integrity - providing impartial, authoritative advice on key issues affecting businesses and society. RICS is a regulator of both its individual members and firms enabling it to maintain the highest standards and providing the basis for unparalleled client confidence in the sector.

The RICS Asia supports a network of over 11 000 individual professionals across the Asia Pacific region with an objective to help develop the property and construction markets in these countries, by introducing professional standards, best practice and international experience. It promotes RICS and its members as the natural advisors on all property matters. It also ensures that services and career development opportunities are provided to members.

The RICS Asia region covers national associations and local groups locating in Brunei, Malaysia, Singapore, Thailand, The People's Republic of China and the SAR Hong Kong. It also has members working across the region such as Bangladesh, Bhutan, Burma/Myanmar, Cambodia, Indonesia, Japan, Kiribati, Laos PDR, Macao, Mongolia, Nepal, North Korea, South Korea, Taiwan region, The Maldives, The Philippines, Timor East and Vietnam. For more information, please visit: www.ricsasia.org.

Media enquiry, please contact:

RICS Asia Public Relations Representative
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T: +852-2372-0090
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