Developers back premium reform
The Lands Department is winning support from developers for a proposal to free them from bearing the cost of building public facilities in comprehensive projects.
The proposal would allow developers to subtract the cost of public buildings associated with a project from the land premium they pay the Government.
Deputy Director of Lands John Corrigall said the move would help the department reach premium agreements with developers and expedite property development.
Mr Corrigall said delays in developments sometimes arose from disagreements over the inclusion of public building costs in land-premium assessments.
The proposal's focus is mainly to reform the commercial redevelopment process for government, institution and community (GIC) sites or land zoned as a comprehensive development area (CDA).
At present, developers undertaking projects on GIC and CDA sites are required to bear the costs of building affiliated public facilities, such as schools and community centres.
The Government does not take into account such costs when assessing the land premium of those sites.
This differs from the practice for land sold by public auction or tender.
Developers' costs of building public facilities on such land are either reflected in retail prices or are reimbursed by the Government.
Mr Corrigall said the proposed change was to bring GIC and CDA sites in line with land sold by public auction and tender.
Developers should be credited and have the costs of public buildings deducted from land premium or reimbursed, he said.
The Government has yet to decide whether to pass the proposal.
Analysts and developers said it would remove the variations in practices for land sold publicly and redevelopments or CDA projects.
It would also bring about savings for developers undertaking CDA or conversion projects with the provision of public facilities, they said.
A senior property executive welcomed the Lands Department's proposal, saying existing rules should be changed to standardise the terms for developers building public facilities.
Swire Properties is contesting a land premium on a site where it has to construct public buildings.
The company wants to subtract the cost of building a school and a community centre from its land premium on a 432-unit residential redevelopment in Taikoo Valley, Quarry Bay.
Mr Corrigall said land premium negotiations were continuing for the project, as the public building cost remained a key stumbling point.
Analysts said the Swire project could become the first to benefit if the practice was changed.
The Mass Transit Railway Corp is expected to be one of the biggest beneficiaries if the proposal is passed.
The company plans to build a 50-block residential development at a future railway depot site in Tseung Kwan O that includes building seven schools, two transport interchanges and extensive public recreational and community facilities.