Knight Frank: Developing Beidu may allow the investment of part of the provident fund into long-term bonds, making good use of market efficiency and innovation capability.

Dai De Liangxing, Managing Director of Hong Kong, responded to the 2026/2027 financial budget, stating that the Hong Kong government will further promote the development of the Northern District. The bank supports the government's proposal to increase the borrowing limit of two bond programs to HK$900 billion to finance the development of the Northern District. It is suggested that in addition to issuing bonds directly to the market, the government could make good use of the massive trillions of Mandatory Provident Fund (MPF) pool from a more macro asset allocation perspective, for example, considering relaxing investment restrictions on trillions of MPF. According to data from the Pension Fund, as of the end of December 2025, the total assets of the Trillions of MPF have increased to approximately HK$1.55 trillion, reaching a historical high. If the Hong Kong government allows a certain proportion of assets (such as 10%) to be invested in long-term bonds for the development of the Northern District, it can provide a stable source of funding for the construction of the Northern District and provide members of the Trillions of MPF with another relatively low-risk investment option. This can create a win-win situation. Dai De Liangxing also suggested that promoting a public-private partnership model in the Northern District can improve efficiency and ease the government's financial pressure, helping to accelerate and implement the development of the Northern District, while utilizing market efficiency and innovation. However, the key lies in how the government clearly defines the roles of public and commercial sectors to ensure transparency in long-term industrial development goals, land use, and return distribution in order to attract private market participation. If complemented by clear planning, phased implementation, and rigorous regulation, the public-private partnership model can become an important tool for promoting industrialization in the Northern District. The bank proposed that the government consider locking in and introducing strategic "anchor institutions," and avoid the situation where the industrial functions of various districts become blurred, in order to establish district positioning and enhance district attractiveness. They hope that the government can implement and announce the details of the entrance of universities and technology industries into the Northern District as soon as possible, strengthening the confidence of developers in settling in the Northern District and district development. They also welcome the government to adopt their earlier recommendations to implement a flexible arrangement for land premium payment in the Northern District to help ease the cash flow pressure for land development and enhance the feasibility and speed of the public-private partnership model and industry introduction. The amount of land supply in the Hong Kong government's land sale plan for the coming year, as well as the potential supply of first-hand private residential units in the next three to four years, indicate a stable trend in land and housing supply. The bank suggests that the government should simplify tender terms and release land to the market in an orderly manner to attract more developers to participate in bidding and stimulate market activity. The "Simplex Housing" regulatory system is expected to take effect on March 1 this year, with a transitional arrangement lasting forty-eight months. At that time, some units may not meet requirements, leading to residents needing to relocate, in addition to the pressure of rebuilding and resettling approximately 27,000 units in old public housing estates in Hong Kong aged over 50 years. The bank believes that urban redevelopment strategies should be flexible and financially sustainable, and the government needs to establish a clear priority order for resettlement, allocating units reasonably to affected residents, tenants of old housing estates, and those on the waiting list. Regarding the current acquisition model of the Housing Authority, the mechanism of acquiring properties at close to first-hand residential property prices (including self-rental allowances) often places a heavy burden on the Housing Authority. Therefore, the bank recommends that the government thoroughly optimize the "building-to-building" mechanism to alleviate the pressure of cash compensation.