Although bonds (債券) attracted attention in Taiwan’s search market, Hong Kong is the venue for the related development and financial discussions.
The central question is how much funding the Northern Metropolis development will require and how that money will be raised.
However, the mere use of the expression “using bonds” does not mean that financing has already been completed.
3-Line Summary
1. The use of bonds was discussed for funding the Northern Metropolis development.
2. A financial working group discussed PPP financing.
3. Confirmed awards and future plans must be distinguished.
Bonds Are a Financing Agenda Item, Not the Conclusion of the Development
NNA Asia covered the matter under the headline “Northern Metropolis development funding to actively use bonds.” However, because the provided material does not include the body of that article, it is not possible to confirm what type of bonds would be issued, by whom, or when, or what the financing scale and terms would be. Therefore, the fact that the use of bonds was mentioned must be considered separately from the fact that an actual issuance or financing has been completed.
What can be confirmed is that discussions on financial support are underway concerning the new urban center Northern Metropolis, being developed in Hong Kong’s New Territories. According to NNA reporting carried by Yahoo! News, the Northern Metropolis Financial Advisory Working Group, established by the Hong Kong Monetary Authority (HKMA, Hong Kong’s monetary and financial authority) and others, held its second meeting on the 26th to discuss public-private cooperation, namely measures to promote financing for PPP projects.
The specialist subcommittee on PPP financing under the working group introduced financing cases from PPP projects in mainland China and overseas. Using these cases as references, it plans to examine various development methods and risk-mitigation measures suited to the Northern Metropolis project and develop models for banks to consult when lending. This is the stage of review and model development, not an announcement that a specific financial instrument has been finalized.
The working group was launched in April this year by the Hong Kong Monetary Authority and the Hong Kong Association of Banks (HKAB, the Hong Kong banking association), with the participation of 23 banks that have records including lending for large-scale projects. Even if the word “bonds” stands out, the center of the financial discussions specifically confirmed by the currently available evidence is PPP financing and bank lending reference models.
Even the Already-Awarded Land Project Has a Long-Term Funding Flow
The successful bidder has been selected for the pilot development project in the first zone of the Hung Shui Kiu–Ha Tsuen New Development Area within the Northern Metropolis. Hong Kong’s Development Bureau announced on 8월 24일 that the tender evaluation had been completed and that Hung Shui Kiu New Development Company Limited had won the award for 10億3천만 Hong Kong dollars. The company is a joint venture formed by 6 companies from mainland China and Hong Kong.
JD.com is the Chinese e-commerce company Jingdong.com. China Overseas Grand Oceans, China Merchants Land, China Resources Land, China Tourism Group, Jingdong.com, and companies affiliated with Sun Hung Kai Properties have joined the project. The award itself is an announced result, but the figure that approximately 168억 Hong Kong dollars will be invested in the overall project, as well as the provision of more than 3천 housing units and more than 6천 employment opportunities after completion, are all future projections.
The project did not select the bidder based on price alone. Under the so-called two-envelope system, the price proposal carried a 30% weighting and the non-price proposal carried a 70% weighting. Non-price evaluation included strategic-industry development, attracting leading companies, development speed, investment scale, and job creation. The reason financing is important in the Northern Metropolis development is that it must cover not only the cost of purchasing land but also attracting industries and sustaining construction over an extended period.
The land payment structure also does not require the full amount to be paid at once. The successful bidder is required to first pay 25% of the land premium, while the remaining 75% may be paid within 3 years. This is the payment system applied to the land project. The proportion of the remaining payment to be covered by bonds or PPP financing cannot be determined from the available evidence alone.
The Logistics-Facility Plan and the Northern Metropolis Financial Discussions Are Not at the Same Stage
The joint venture said it would develop the enterprise and technology park site into a smart modern logistics center, with an affiliated company of the Jingdong.com Group serving as the core tenant. According to an explanation by an official, JD Logistics proposed establishing localized warehouses and an operation center in Yuen Long within several years, and also expected to create more than 2천500 jobs. However, this should be read as a plan and an expectation.
The same applies to the joint venture’s statement that it would immediately begin planning, designing, and constructing the industrial site, as well as its plan to bring a modern logistics industrial building into operation within 55 months. The Hong Kong government’s stated direction of pursuing the Northern Metropolis with an industry-first approach and the actual result of facilities becoming operational and generating jobs and industrial functions are not yet the same thing.
The first distinction to make when reading reports related to bonds is simple: items already decided, such as the award result and land-payment conditions; items under discussion, such as the PPP structure, risk-mitigation measures, and bank models; and items that are plans or projections, such as the logistics center, employment, and investment scale. The Northern Metropolis’s funding needs are evident in specific development projects, but based solely on the available evidence, it is not possible to conclude whether specific bond financing has been executed.
References
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