Industrial lofts could ease Hong Kong's housing shortage

Franklin Koo urges the government to consider opening up the city's disused warehouses and factories for residential use, a strategy that has been shown to work elsewhere

PUBLISHED : Tuesday, 23 June, 2015, 2:31pm
UPDATED : Tuesday, 23 June, 2015, 5:06pm

While debate goes on over whether Hong Kong should sacrifice some of its green spaces for more affordable housing, property prices have continued to soar, driving more people to turn to cheaper commercial and industrial property. However, there is a catch. Many of these loft dwellers live illegally because zoning laws prohibit the conversion of commercial or industrial buildings into residential space.

With the housing shortage showing no sign of easing, is it now time to consider regulating and opening up Hong Kong's commercial and industrial spaces to residents?

The relocation of Hong Kong industries to mainland China has resulted in vacancies in large warehouses in areas such as Chai Wan, Wong Chuk Hang and Fo Tan. With a gradual decline in heavy industries that produce foul smells and loud noises, people have started residing in these buildings, which typically offer more space than the average flat, yet are cheaper.

Hong Kong could try to prevent such illegal conversions by strictly enforcing the zoning law, but such enforcement may be futile, as legal grey areas make it possible to get around the restrictions. For instance, a company can be formed to buy and hold an industrial property. This company can then hire a "24-hour security guard" to be a resident on the property to "protect assets stored on the site", making it arguable that a living area for the purpose of protecting the business is required.

The Lands Department is understaffed, so enforcement is rare and difficult. Officials will usually only act on complaints filed by a neighbour. Even if caught, the requirement is to convert the property back to the original intended use. The typical penalty would not involve criminal prosecution. As a result, many people have taken the gamble to live illegally.

Given the ineffective measures to prevent mixed-used land, is there still a reason to maintain the status quo or should we follow the idiom, "If you can't beat them, join them?"

Legitimising lofts has its advantages. First, the addition of legally and readily available residential units could immediately alleviate the acute housing shortage. It would be a welcome solution for many residents who feel that the government has not done enough to control sky-rocketing property prices, and who see housing policies as generally catering to the property developers.

The presence of new residents can also revitalise disused industrial districts. The former ATV studio in Sai Kung for instance, has been reclaimed, not by residents, but by nature and graffiti artists. Recently, the site was suspected of housing illegal explosive devices. Given our housing shortage, this enormous space could have been converted into valuable mixed-used land. In turn, the repopulated area would have prevented the decay, vandalism and proliferation of illegal activity that otherwise frequents an abandoned property.

Moreover, the loft dwellers would not be forced, as is the case now, to pay higher utility fees charged at commercial and industrial rates. While safety and noise remains a serious concern in these zones, regulations could be passed to enable residential living if lofts were made legal.

Country parks may provide residential land only after years of development, but there are vacant commercial and industrial spaces that can be a more immediate source of affordable housing. Furthermore, this concept is not new, having been popularised successfully in New York for example.

It is also worth considering that, while lofts are considered illegal, our unregulated subdivided flats, some of which are in such appalling conditions that they carry serious health and safety risks, are legal.

There is no single, simple, or elegant solution to the housing problem, but rather than solely relying on conventional methods, legitimising "mixed used" zoning could be an option that makes an immediate and positive impact to Hong Kong's housing supply.

Franklin Koo is an accredited mediator and author of Power to the People: Extending the Jury to the Hong Kong District Court. franklin.koo@gmail.com