URA set to lose on HK$1.2b Kwun Tong building revamp
Project pushed by owners of neglected blocks will create 115 flats, but it’s expected to deepen authority’s deficit ahead of financing review
The Urban Renewal Authority yesterday launched another demand-led redevelopment project, amid a review of the scheme.
The building targeted - the nine-storey Hip Lee Building at 12-30 Hang On Street - is 51 years old, and has about 80 flats and 10 shops. With many of the flats subdivided, it is estimated the building accommodates about 160 households.
"The common areas are dilapidated. There is water leakage, falling concrete and exposure of rebar. There are also many unauthorised structures and sub-divided flats," Wilfred Au Chun-ho, assistant general manager of the URA, said as the reasons for accepting the proposal.
Under the authority's plan, a new block with 115 flats and social welfare facilities will be built on the 865 square metre site after the existing building is demolished.
Flat owners will be given compensation options of cash or a new flat in Kai Tak.
Acquisition and clearance director Ian Wong Chun-ho said the URA was expecting this project to make a financial loss, but declined to give a figure. It is understood that previous projects under the demand-led redevelopment scheme have accumulated losses of HK$3 billion.
This has put additional financial pressure on the URA, which has said it might switch its focus to more profitable projects after recording a HK$2.3 billion deficit in the last fiscal year.
The URA has launched a review of the scheme and is expected to announce the results by the end of this year. Yesterday, Wong remained tight-lipped on the future of the scheme.
"We will make an announcement after the board of directors has reached a decision," he said.
The latest redevelopment initiative will go ahead if owners holding a combined share of at least 80 per cent of the block accept the deals offered by the authority. Uy Moon-eng, chairwoman of the owners' corporation, said owners of 84 per cent of the building had already indicated support for the plan by the time they filed the application to the URA in September last year. Flat owners wanted compensation of more than HK$10,000 per square foot.
"One night in 2010, a piece of concrete as big as a dining table at Cafe de Coral fell from the ceiling in my bedroom," said Uy, 67, who bought her flat 22 years ago. "I support redevelopment … I have spent hundreds of thousands of dollars on repairs over the past decade or so. Now I am old and have no more money."
But Lam See-yuen, who owns a stationery shop on the ground floor, said: "I have run my business here for over 40 years and bought it five or six years ago. I won't be able to afford the high rent elsewhere for my stationery shop. If they really redevelop this building, I will have to retire."
