Developers to bank on serviced-unit changes

PUBLISHED : Wednesday, 29 March, 2000, 12:00am
UPDATED : Wednesday, 29 March, 2000, 12:00am

Developers are expected to become more aggressive in venturing into serviced-apartment projects in anticipation of proposed regulatory changes which will ease controls on sales and management of the sector.

The relaxation proposed by the Lands Department involves changes in lease conditions effectively allowing the strata-title sale of serviced apartments.

Despite a couple of exceptions, serviced apartments cannot be disposed of except as a whole under existing rules.

To simplify and streamline procedures and practice, the Lands Department suggested dropping serviced apartments as a special category in land lease conditions and replacing it with a broader residential use.

It is believed the department is concerned about the potential problem of differentiating between serviced apartments and highly serviced residential flats. Industry experts said categorising land use as simply residential would avert uncertainties over future sales and management of such properties.

Developers would be delighted by the relaxation of rules as the ability to sell serviced apartments on strata-title would make it easier for developers to cash in as they do in conventional residential projects, analysts said.

Critics argue the proposed changes would make serviced apartments no different to ordinary residential properties.

There is debate over whether standards should be imposed on developers guaranteeing the quality of management for serviced apartments after they are allowed for strata-title sales.

In the process of lobbying for relaxations, developers had indicated they might retain a partial interest in projects even if serviced apartments could be sold on strata-title.

Sources said the Lands Department did not intend to impose controls on retaining an interest.

There was no advantage to regulating serviced apartments and the department's move to drop the rules was designed to facilitate development, one source said.

Critics expressed concerns future management of serviced apartments would be jeopardised after strata-title sales if there were no regulations in place.

However, some analysts and developers said if rigid controls were maintained on management, the marketability of serviced apartments would be jeopardised.

There has also been confusion regarding what constitutes a serviced apartment.

The Town Planning Board last September issued guidelines defining a serviced apartment as a residential establishment held under central management, with central air-conditioning.

It also laid conditions for size, facilities contained within and composition of the apartments.

A property company executive said there had been a lack of co-ordination between government departments in handling serviced-apartment projects in the past.

He said the new planning guidelines helped standardise serviced apartments and the Lands Department's proposed relaxation would streamline development.

Analysts said the relaxation would encourage developers to redevelop under-utilised sites into serviced apartments and stimulate interest in buying such sites.

The Lands Department has a 2.03 hectare site in Hunghom Bay reclamation area earmarked for hotel and serviced apartments. The site is on the application list for sale, subject to developers' offers.

The site's lease conditions are under review in view of the proposed regulation changes.

One property company executive said government officials appeared to be keen to keep serviced apartments as a distinct category, which could provide an option for the redevelopment of obsolete industrial properties.

He said it was impossible to secure government approval for residential redevelopment in under-utilised sites in industrial areas, due to environmental concerns and building incompatibility.

He said serviced apartments would be an alternative providing an interface of compatible developments in those areas due to their closed-loop facilities.

A number of serviced-apartment projects had been approved in the past two years as redevelopment of sites in industrial areas.

Major projects planned include Sun Hung Kai Properties' redevelopment of the former Swire bottling plant in Tsuen Wan, Hutchison Whampoa's project in Tsing Yi and Henderson Land's redevelopment of a Tai Kok Tsui shipyard.


Send to a friend

To forward this article using your default email client (e.g. Outlook), click here.

Enter multiple addresses separated by commas(,)

For unlimited access to: SCMP Tablet Edition SCMP Mobile Edition 10-year news archive