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News & opinion

24 APR 2018

Building a modern Asia

The continent has undergone momentous changes in the 150 years since RICS was founded, and surveyors were as critical to its past as they are to its future.

Since the foundation of RICS in 1868, Asia has transformed. British Hong Kong had only come into being 26 years before, in 1842, and Singapore was ceded to the British government in 1858. Japan and South Korea, mainland China, and the former French colonies of south-east Asia have all been through profound change. World wars have brought the rise and fall of empires. India went through partition in 1947. Virtually no Asian nation was in its current form when RICS began 150 years ago.

Through it all, the surveying profession has had to transform with the changing landscape – literally and figuratively – of the region. Now it faces its staunchest test to date. The legacies of dynasties and administrations that have long since faded remain. Many of the land uses and systems of title predate the formation of the modern nations we now know.

Japan's feudal past

In Japan, it is incredibly hard to piece together large enough parcels of land to construct a project of any notable size. That is a legacy of Japan’s feudal past. It was only during the Meiji administration that the government confiscated the estates of the daimyo, or feudal lords, compensating them generously in return. As of 1871, the government began granting title deeds to land occupiers and people who had been receiving rents from land or who had a mortgage on a property.

It was a seismic shift – Japan had previously had no clear concept of private property rights. But the granting of permanent tenancy or “perpetual” cultivating rights only went some way towards rationalising the system – often with great protest among those who felt they had lost out.

The devastating Great Kanto Earthquake of 1923, which killed 120,000 people in Tokyo and Yokohama, changed the shape of those cities further. In the recovery effort, the Tokyo government subdivided the 355m ft2 (33m m2) of the city that had been devastated into 66 land-readjustment districts.The government was free to seize up to 10% of all private land, without compensation, to turn into public space.

Hong Kong's urbanisation

The resulting compartmentalisation of the city is still felt today. That is also the case in South Korea, which went through a similar transition from feudal to modern nation. While Hong Kong as an island had few residents when the British arrived, the New Territories, leased in 1898, had many. The subsequent conversion of the land from freehold to leasehold in 1905 changed the ownership structure of the colony permanently. Those ramifications are still felt today in the difficulties in finding plots for the “small homes” promised to all male descendants of the native families.

The city’s rapid and extremely dense urbanisation followed, leading to other changes in ownership structure. Strata-title ownership of buildings was effectively invented in Hong Kong, Lau Chun-kong MRICS, international director and Asia head of valuation advisory at JLL, points out.

Lau, who writes a column on land use and planning in Hong Kong for the Hong Kong Economic Times, notes that the first instance of this structure came at 46 Hillwood Road, in 1952. The five-storey building was subdivided so that the individual owners of each floor owned their portion.

The developer signed the deed of mutual covenant with the owner of the first floor, and all the other floor owners were legally bound by the deed. The building was subsequently bought up by another developer and redeveloped into a commercial building in the 1980s.

This became a common way of dividing up Hong Kong’s tong lau buildings, well before the construction of its iconic skyscrapers. In a tong lau, which normally has between five and seven floors, the ground floor and loft space belong to a company and the upper floors are owned by residents. Whilethis manner of ownership is useful and provides security of title for the individual owners, it was Hong Kong’s developers that actually “invented” the idea. They were able to sell the individual floors for more than the price of the building as a whole, giving them a better profit margin per floor.

Although the real estate profession in Hong Kong is highly regulated, that is not the case even in its near-neighbour. Thanks to its history as a Portuguese colony, Macau is a much less-regulated real estate market. Property agents, for instance, did not have to be licensed until 2013, unlike other Asian markets. It is also notoriously hard to establish free title to real estate plots because many records were lost to fire during the Portuguese colonial era.

China's historical hangovers

Mainland China is unencumbered by such historical hangovers. The Communist Revolution successfully erased any lingering legacy of the Qing Dynasty and indeed the centuries of Chinese development before that, wiping the slate clean, in terms of real-estate law. All land suddenly belonged to the state.

And now it is being parcelled off again. That process allows developers to amass very large plots of land for development without any of the complications involved in assembling individually owned parcels elsewhere in Asia. The developer need only negotiate with the local or provincial government. “They don’t have segmented fragmented land at all because of the way they changed land ownership,” Lau notes. Deng Xiaoping, the leader who set communist China on the road to reform, in fact based the country’s system of long-term government rights on the UK leasehold system. That is not something current leaders are likely to admit, but it gives them the basis for the formation of the huge new towns and cities that are flying up before our eyes.

Nicholas Brooke FRICS, chairman of the consultant Professional Property Services Group, feels China is not doing enough to preserve its history. Beijing is doing a better job than anywhere else, but even it attracts its share of heat for the destruction of the hutong courtyard buildings that made a maze of the old parts of the city. “Typically, in China it’s been remove and rebuild,” Brooke notes. That’s showing signs of the start of change. “But a lot of damage has been done. They’re a bit late in recognising the value.”

Singapore has led the way in terms of preserving its historic shophouses, for instance. But it is an expert administration at encouraging adaptive reuse rather than preservation for preservation’s sake. It is a lesson Hong Kong and other Asian cities have been slow to apply. “There was no question of trying to revitalise or rejuvenate existing areas – it was condemn, destroy and rebuild,” says Brooke. “What was then built was very different to what was there before, and people were displaced and had to be rehoused in new towns. It was very disruptive to real life.”

Brooke, who mentors several young surveyors, has noticed a change in the mentality of the younger generation. “Now across Asia many cities are rather more gentle,” he says. “It’s a much more soft and community-driven approach.”

Shaping the continents

The surveying profession has had much to say in the development of urban Asia. Architects may claim to have built the continent’s metropolises, but surveyors have shaped them, monitored them, and managed them.

Organisations such as RICS have helped to implement international best practices in the region. It used to be the case that the surveying profession consisted of outposts infar-flung British colonies that reported back to London. The situation persisted until virtually the turn of this century.

Now the profession is far more international, spread into virtually every corner of Asia, with local Asian talent representing multifaceted, rather than Euro-centric, interests. “I describe it as a professional passport,” Brooke says of RICS membership. “It’s become a truly global qualification, recognised internationally, and that’s an exercise that has been ongoing for the last 10 or 15 years now.”

Now, surveying and other property professionals face another challenge: the digitisation of practically everything. What has been a very physical brick-and-mortar world is being translated into a melded real-and-virtual world. That has yet to make itself felt in terms of the types of construction methods but, as far as Brooke is concerned, the future is modular: “We’ll end up with Lego buildings one day, buildings you can take apart, put together again, and move around,” he says. “If we were having this conversation in eight years’ time, I suspect concrete and steel will have gone and we’ll be using other materials. It’s that scale of revolution.”

A full 150 years has gone into making Asia the place it is now. If Brooke’s prediction is correct, the landscape will have transformed again in less than 15. And no doubt the pace of change will startle those who look back in another 150 years  as being astonishingly slow.

This is an extract from Modus Asia Edition Q1 2018