Cost of converting factories could be lowered
The government is considering lowering the land premium payable for converting old industrial buildings to new uses, a senior government source said.
It is one of several incentives being considered to speed up the revitalisation of industrial zones and old residential buildings.
Legislators will next week discuss proposals to make it easier for developers to trigger the compulsory sale of properties in old residential and industrial buildings. At present a developer must buy 90 per cent of the properties in such buildings in order to force a sale of the remainder; the plan is to lower that threshold to 80 per cent.
The proposal covers industrial buildings more than 30 years old and residential blocks more than 50 years old.
Chief Executive Donald Tsang Yam-kuen is expected to announce steps to promote the reuse of industrial zones early next week.
However, the source said the proposed changes did not mean the government encouraged the demolition of industrial buildings.
'Old industrial zones can become a very good facility for the community,' the source said. 'The industrial buildings can become a 'book city', a gathering place for artists and bands. The whole area will be uplifted.'
It was more environmentally friendly to convert buildings than demolish them, the source said.
With this in mind, the government is considering incentives favouring conversion of industrial buildings, especially those with less redevelopment potential. One possibility was to reduce the land premium - the money a developer has to pay to reflect the value added to a property by redeveloping it - the source said.
'A little reduction in the government's revenue will allow a larger financial gain by increasing economic activities in old areas,' the source said.
If legislators approve the incentives, they will be introduced in six months' time.
Private buildings can only be redeveloped when developers have bought 90 per cent of the properties within them. The Lands Tribunal will then order a compulsory sale of the remainder if developers demonstrate they have taken reasonable steps to acquire them and that the redevelopment is justified on the grounds of the building's age and state of repair.
Because of the high land premiums demanded for converting old industrial buildings and stringent building and fire safety rules, many are converted without permission.
The idea of lowering the land premium has not been well received by developers, who say it would be unfair to reduce them now when they have for years had to pay high premiums to turn industrial blocks into offices.
Institute of Surveyors spokesman Raymond Chan Yuk-ming said buyers of old industrial buildings should be allowed to force a sale of remaining properties if they have acquired 70 per cent or 75 per cent of units.
He also said the government should relax building rules.