Hong Kong housing

Backing low-cost housing plan for old factories

PUBLISHED : Wednesday, 14 November, 2012, 12:00am
UPDATED : Tuesday, 22 September, 2015, 4:52pm


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I refer to the report ("Old factories to be bulldozed for new flats", October 27).

As a chartered surveyor with long-running involvement in urban renewal, I was pleased to hear of the Urban Renewal Authority (URA) taking proactive steps to assist in meeting Hong Kong's shortage of affordable housing, particularly in such an ideal Kennedy Town location (Cheung Hing Industrial Building). Replacing an old factory with affordable low-cost housing is exactly why the URA was established.

However, the article highlights the unbridled greed of some local property owners. An owners' committee member of this old industrial block said they would not accept less than HK$10,000 per square foot compensation. This is a wholly unjustified demand given the URA's generous offer of market value plus four times government ex-gratia payments. This is for an old building which has legal use restricted to "industrial purposes" under its occupation permit. The fact there has been unauthorised use of the factories for offices is irrelevant, and the owners' demands for the land value for redevelopment here is unjustified.

There are 14 separate owners in the complex, and compensation will not be based upon redevelopment value unless there was a viable redevelopment scheme under way before the URA project was publicised.

At such generous rates of compensation, it is unsurprising that the URA estimates it will incur a HK$100 million loss on this project, albeit for a sound cause. There is a simple answer here. The URA should not increase its compensation offers, but withdraw from the acquisition process if these generous terms are not accepted.

The legal interests will then be resumed under the Lands Resumption Ordinance, and the owners can take their claims to the Lands Tribunal. They will then get statutory compensation, being "market value" under the ordinance, without any ex-gratia allowances. This has already been assessed by independent surveyors at circa HK$2,200 per square foot.

If the URA's site acquisition costs are more than halved, the funds saved can be put to work on similar urban renewal projects to meet Hong Kong's chronic lack of affordable housing, particularly in urban areas. Our chief executive has recently asked the public to point where on the map new low-cost housing can be built; there is potential for many more of these projects in old industrial sectors of Tai Kok Tsui, San Po Kong and Kwun Tong, and they certainly represent part of the answer.

Ian R.C. Cullen, Ian Cullen & Associates