Hong Kong land development and policy intensity: strategic embedding in a period of transition Fangxin Yi, Hongfei Yu, Xianyun Zhang, Yang Yue Policy Focus Hong Kong’s urban development has long relied on a landbased fiscal model, in which land revenue supports public finance while also shaping housing, infrastructure, and urban planning priorities. Yet, as Hong Kong faces growing housing affordability pressures, market instability, and sustainability demands, land policy is increasingly expected to serve broader social and developmental goals rather than simply maximize revenue. This study underscores the need for a more fiscally resilient and time-sensitive approach to land governance. By using large language model analysis of Policy Addresses from 1997 to 2023, the study finds that stronger land policy intensity can reduce absolute land revenue, but it does not fundamentally change land revenue’s relative importance in Hong Kong’s fiscal structure. This reflects both strategic policy recalibration and persistent institutional path dependency. Study Methodology This study combines policy text analysis with quantitative time-series modelling to examine the relationship between Hong Kong’s land policy intensity and land-related fiscal Key Points ► The study finds that stronger land policy intensity significantly reduces the absolute amount of land revenue, but does not substantially change the share of land revenue in Hong Kong’s overall fiscal structure. ► This pattern reflects a strategic shift in Hong Kong’s land governance from revenue maximization toward social welfare, housing affordability, market stabilization, and sustainable development objectives. ► Hong Kong’s fiscal structure still remains deeply constrained by institutional path dependency, meaning that land revenue continues to retain its relative fiscal importance despite ongoing policy recalibration. ► The effects of land policy intensity are timesensitive: policy and revenue interact in the short term, policy effects dominate in the medium term, and these effects gradually dissipate in the longer term. photo from Sebastien Goldberg 19th Issue December 2026 Public Policy BULLETIN
2 outcomes. The authors first collected Hong Kong’s annual Policy Addresses from 1997 to 2023, excluding 2002 when no Policy Address was released, and used them as the main source for measuring land policy intensity. Statistical data on land transactions, land-related fiscal revenue, economic development, population, land auction area, and fiscal capacity were obtained from official sources, including the Hong Kong Land Registry, government financial reports, the Hong Kong Monetary Authority, and the Hong Kong Annual Digest of Statistics. To construct the land policy intensity index, the study used a large language model, ERNIE, to identify policy sentences related to land resource allocation, land management, urban planning, administrative authority, and local governance. The model was trained and tested using manually labelled policy sentences, and its classification accuracy outperformed several traditional machine-learning models. The resulting index was then incorporated into regression analysis, error correction models, and Granger causality tests to examine both the short-term and long-term effects of land policy intensity on land revenue and fiscal structure. Findings and Analysis Rising but Fluctuating Land Policy Intensity Hong Kong’s land policy intensity shows a pattern of phased fluctuation and gradual long-term growth from 1997 to 2023. The policy intensity score was relatively low in 1999 and 2006, at 1.8 and 1.3 points respectively, but became more prominent in 2008, 2014, and 2019, reaching 4.6, 5.0, and 5.7 points. This suggests that Hong Kong’s land governance has become more active and policy-driven over time, especially in areas such as land resource allocation, urban planning approval, market regulation, and development control. Reliable Measurement through Large Language Models Before examining the fiscal effects of land policy intensity, the study tests the reliability of its text-based measurement. The ERNIE model achieved a classification accuracy of 85.11%, outperforming traditional machine-learning models, including the Voting Classifier at 76.60%, Neural Network at 75.00%, SVM at 73.40%, Gaussian Naive Bayes at 69.68%, and KNN at 68.09%. This indicates that the large language model can more effectively identify land-policy-related meanings embedded in official Policy Addresses. Land Policy Intensity Reduces Absolute Land Revenue The regression results show that stronger land policy intensity is significantly associated with a decline in the absolute amount of land revenue. In the baseline error correction model, a 1% increase in policy intensity is associated with a 0.66% decrease in land fiscal revenue in the same period. In practical terms, this means that a 10% increase in policy intensity would lead to an approximate 6.6% decline in land fiscal revenue. When lagged dynamics are included, the negative effect remains, though it becomes smaller: a 10% increase in policy intensity corresponds to an approximate 4.5% decrease in land fiscal revenue. This finding suggests that intensified land policies do not necessarily aim at maximizing land income. Instead, they may reflect the government’s growing concern with housing affordability, market stabilization, public housing supply, and sustainable urban development. Stronger intervention may reduce land transactions or limit revenue-oriented land disposal, thereby lowering land revenue in absolute terms. Figure 1: Annual trend of land policy intensity level Hong Kong land development and policy intensity: strategic embedding in a period of transition Public Policy BULLETIN
3 Reduce Structural Dependence on Land Revenue Land policy should not be treated as a stand-alone solution for fiscal sustainability. Although stronger land policy intensity affects the amount of land revenue, the study shows that it does not significantly change land revenue’s relative importance in Hong Kong’s overall fiscal structure. This reflects a deeper path dependency in Hong Kong’s land-based fiscal model. To reduce long-term fiscal vulnerability, the government should gradually broaden non-land revenue sources, review expenditure commitments that implicitly rely on land income, and develop a more diversified fiscal framework. This would allow land policy to focus more clearly on housing, social equity, and sustainable development rather than revenue generation. Adopt a Time-Sensitive Approach to Land Governance The study’s dynamic findings suggest that land policy effects vary across time horizons. In the short term, land policy can be used to respond to market overheating, housing affordability pressures, or fiscal fluctuations. In the medium term, stronger coordination among housing, planning, transport, and fiscal authorities becomes more important than simply increasing policy intensity. In the long term, the effects of land policy on revenue gradually weaken, meaning that deeper institutional reforms are needed beyond the land sector. Policymakers should therefore design land policies with clear short, medium, and long-term objectives rather than assuming that one policy instrument can deliver lasting fiscal and social outcomes. Time-Sensitive Policy Effects The Granger causality results further show that the effect of land policy intensity changes over time. In the short term, land policy intensity and land revenue influence each other. This means that stronger land policies can affect land revenue, while changes in land revenue may also push the government to adjust its policy approach. In the medium term, the relationship becomes more one-directional: land policy intensity continues to affect land revenue, but land revenue no longer strongly shapes policy intensity. In the longer term, this relationship gradually weakens and becomes less clear. This suggests that land policy can be useful for short-term fiscal adjustment or market stabilization, but its impact on revenue does not last permanently. Recommendations Build Fiscal Buffering Mechanisms into Welfare-Oriented Land Policies As Hong Kong’s land policies increasingly serve social welfare objectives, such as expanding public housing supply, improving housing affordability, and stabilizing the property market, policymakers should anticipate the fiscal trade-offs of stronger policy intervention. Since the study finds that higher land policy intensity can reduce absolute land revenue in the short term, the government should establish fiscal buffering mechanisms to manage revenue volatility. Counter-cyclical reserves, stabilization funds, and more careful medium-term budget planning can help absorb temporary declines in landrelated income without weakening public service provision or delaying housing and infrastructure projects. Figure 2: Comparison of classification accuracy for ERNIE and Other models Hong Kong land development and policy intensity: strategic embedding in a period of transition Public Policy BULLETIN
4 Follow Us on Social Media Contact Us (852) 3469 2721 ppolpr@ust.hk The Hong Kong University of Science and Technology c/o Division of Public Policy (PPOL) Room 4611, Academic Building, Clear Water Bay, Kowloon, Hong Kong Xianyun Zhang is a PhD student at the School of Urban Planning and Design, Peking University. His core research focuses on urban spatial structure and the application of large language models in urban studies. With an interdisciplinary background in architecture, economics and computer science, he studied at Wuhan University and City University of Hong Kong, and holds a master’s degree in Regional Economics from Wuhan University. His research lies at the intersection of geography and economics, applying cutting-edge computer technologies to urban studies for greater interdisciplinarity. He uses diverse data sources including geographic data, statistical yearbooks, policy texts and first-hand survey data. His work mainly examines the socioeconomic impacts of land and transport policy shifts, urban spatial restructuring and urban renewal. Main Reference Yi, F., Yu, H., Zhang, X., & Yue, Y. (2026). Hong Kong land development and policy intensity: strategic embedding in a period of transition. Journal of Asian Public Policy, 1–16. https://doi.org/10.1080/17516234.2026.2640860 Fangxin Yi is a research assistant professor at the Division of Public Policy, the Hong Kong University of Science and Technology. Her research focuses on urban development and policy, disaster governance and resilient cities, risk management and analysis, participatory governance, and AI-driven governance. She adopts interdisciplinary approaches to address pressing challenges at the intersection of technology, policy, and urban systems. Her applied research bridges academic insights with real-world governance challenges. Hongfei Yu is a Ph.D. candidate in the Department of Sociology at Tsinghua University and a Visiting Scholar in the Department of Political Science at the University of Chicago (2025–2026). He earned his B.A. (with a minor in Economics) and M.A. in Sociology from Nanjing University. His primary research interests lie in development sociology, political economy, and social stratification and mobility. Specifically, he examines the institutional mechanisms through which local state action influences local economic development, resource distribution, and socio-economic disparities. His broader research agenda also explores grassroots governance, fiscal decentralization, and the dynamics of educational and structural inequality. Yang Yue is a master’s student in Urban Planning and Design at City University of Macau. Her research centers on land development, quantitative policy analysis, urban spatial governance and urban renewal. Focusing on land governance in high‑density cities of the Guangdong‑Hong Kong‑Macao Greater Bay Area, she adopts quantitative policy‑text analysis to explore the interactions between land institutions, planning control and urban development. Taking Hong Kong’s transitional land‑development practices as a case, she quantitatively assesses policy intensity and derives land‑regulation logics adapted to urban development stages, so as to provide empirical evidence for territorial spatial planning and policy improvement. Hong Kong land development and policy intensity: strategic embedding in a period of transition Public Policy BULLETIN
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