North Point project faces height limits
A New World Development project in North Point has shown that obtaining building approval is not a guarantee that the redevelopment potential of a new site is assured, according to surveyors.
In May, New World won approval from the Buildings Department for its joint-venture project at New Eastern Terrace, a few weeks before the Planning Department's new height restrictions in North Point began last month, but surveyors said the developer could be forced to follow the revised rules.
This is because the land lease of the site is not unrestricted.
New World teamed up with developer Hip Shing Hong to buy old buildings at New Eastern Terrace for HK$650 million in December last year and planned to knock down the buildings and redevelop the site into a luxury residential project.
The developers won approval from the Buildings Department in May to build two 33-storey and 35-storey residential buildings above five podium levels.
This is about three storeys over the height limit granted by the Planning Department.
Last month, the department proposed setting building height restrictions in North Point.
The site at New Eastern Terrace was restricted to 140 metres. This meant the scheme submitted under the approved building plan would exceed the height limit by about three storeys.
According to the land leases, the sites were restricted to building heights of 40 and 45 metres for many years. Surveyors said New World and Hip Shing Hong had to apply for modification of the land leases to relax the restriction, irrespective of whether the Town Planning Board had set the 140-metre building limit.
'The Lands Department will follow the provision of the Planning Department,' said Lau Chun-kong, an international director of Jones Lang LaSalle.
'Once the developer applies to modify a lease for a relaxation, the Lands Department will impose a building height restriction on that lease,' Mr Lau said
He said the building plans of the sites could not fully safeguard the development potential from restrictions imposed by the government.
If the developers fail to convince the Town Planning Board to relax the height restriction, he believes they would be forced to cut the building height.
'The higher the building the higher the price a developer can fetch,' Mr Lau said.
'The value of the project would decrease by 2 per cent to 3 per cent if the developer cuts back on the building height.'
The Planning Department has quickened the process of imposing development restrictions in Hong Kong in order to retain the character of the living environment and avoid over-development.
Urban areas including Kowloon Tong, Quarry Bay, Happy Valley and the Peak have had restrictions imposed.
Developers have also fast-tracked projects to safeguard their development potential even though they have not acquired full ownership of the sites.
The land leases of old buildings in Seymour Road in Mid-Levels, acquired by Swire Properties and Emperor Investment, are unrestricted.
Mr Lau said New World Development's case showed that developers could face a higher development risk over acquisitions of sites with restricted leases.
'Developers will have reservations concerning sites with similar land lease terms,' he said.