(Bloomberg) -- Hong Kong's government plans to spend HK$624 billion ($80 billion), equivalent to half its fiscal reserves, to reclaim land for artificial islands that'll help ease its housing crunch.
The price tag for the so-called Lantau Tomorrow Vision includes costs for reclamation, infrastructure and improving transportation, Michael Wong, secretary for development, said at a briefing Tuesday. More than a third, or HK$256 billion, will go toward building artificial islands spanning 1,000 hectares off Lantau Island.
“Since the proposal has been announced, there has been much concern in the community on whether building artificial islands and related infrastructure would drain government coffers and leave us broke,” said Wong. “We have looked into it and our conclusion is that it won't.”
READ MORE: Hong Kong Has a $64 Billion Plan to Build Islands for New Homes
The ambitious plan was first pitched by the city's Chief Executive Carrie Lam as part of her annual policy address last year, when she said the government would realize the vision within 20 to 30 years. Surrounded by water on three sides and mainland China on the other, Hong Kong faces a severe shortage of land supply that has pushed property prices to among the least affordable in the world.
The government would be able to finance the project because costs would be spread out over a long period, Wong said. The Hong Kong Institute of Surveyors estimates that the sale of commercial and residential land in the artificial islands could yield HK$970 billion to HK$1.14 trillion of revenue.
The administration had HK$1.2 trillion in fiscal reserves at the end of January.
To contact the reporters on this story: Shawna Kwan in Hong Kong at wkwan35@bloomberg.net;Natalie Lung in Hong Kong at flung6@bloomberg.net
To contact the editors responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net, Jeanette Rodrigues
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