Joint venture proposed with Hong Kong’s private sector over West Kowloon Cultural District
Chief Executive Leung Chun-ying explained the “enhanced” financial arrangement was to ensure the cultural hub fully attained its vision of meeting the long-term development needs of the city’s arts and culture
The West Kowloon Cultural District (WKCD) will get a much-needed fiscal lifeline when the government grants the body overseeing its development rights of hotel, office and residential zones for a joint venture with the private sector.
The landmark move will mean the West Kowloon Cultural District Authority will have the funding for the final phase of the multibillion-dollar arts hub, which the government has been struggling with, as it can share profits with the private sector.
It will also help to absorb the expected deficit of some HK$500 million per year for running the arts and culture facilities.
Announcing the move, Chief Executive Leung Chun-ying explained the “enhanced” financial arrangement was to ensure the cultural hub fully attained its vision of meeting the long-term development needs of the city’s arts and culture, and to foster the growth of cultural and creative industries.
“The authority may develop the hotel, office or residential facilities jointly with the private sector through open tender and a build-operate-transfer arrangement, and share rental revenue from such facilities to sustain the operation of the WKCD,” he said.
“This will dovetail with the financing arrangement for the development of the third batch of art and cultural and related facilities, particularly a world-class music centre, to offer opportunities for local as well as mainland and overseas music troupes and musicians to showcase their talent in the WKCD,” he added. The relevant zones will occupy an area of about 360,000 square metres.
A government source said without this special arrangement the authority would face a deficit of HK$500 million per year for the next decade. Even with the support, it would need to borrow from banks and make other financial arrangements when building the facilities in the third phase, the source added.
The authority has already obtained HK$21.6 billion, approved by the Finance Committee of the Legislative Council, for the construction of the first two phases on the 40-hectare site.
But it has yet to secure funding for the third and final phase of the long-delayed mega project encompassing theatres and concert venues scheduled for completion after 2020.
The planned construction of the controversial Hong Kong Palace Museum for which the government and former board chairwoman Carrie Lam Cheng Yuet-ngor were criticised, is set to add to the financial strain.
The Finance Committee is yet to approve the proposal by Leung.
Duncan Pescod, authority chief executive,welcomed the arrangement, saying it would provide a stable source of funding to support the sustainable operation and development of hub facilities.
Dorothy Chow, regional director of the valuation department at JLL had reservations.
She said the retail market was on a downward trend and cast doubt on the returns of the development sites to be offered.
Additional reporting by Sandy Li