The Urban Renewal Authority has announced a plan to turn a 10-storey industrial building in Cheung Sha Wan into a commercial building at a cost of HK$1.7 billion.
The URA said it expected to lose up to HK$500 million on the project, which it hopes to complete by 2019-20.
The 50-year-old Wing Hong Factory Building on Yu Chau West Street has about 40 owners and 40 business operators. Under the plan, the 1,400 square metre building will be replaced with one of 16,700 square metres.
The URA said the loss was only slight and would not constitute a big problem. The acquisition price will not be made known for about six months.
"It would be irresponsible to announce the price now," William Wan Shiu-wah, the URA's director of property and land, said yesterday. "First, the two surveyors [for the project] have not been decided yet. Second, if I announce the price now it would give a price guide to other surveyors.
"Third … the acquisition will be made several months later and there are big fluctuations in the property market."
The URA will pay owneroccupiers the market value of the property plus an ex-gratia, or special allowance, equal to four times the amount it usually pays.
Owners of vacant or leased units will receive the market value of the property, plus 1.5 times the allowance, while tenants will get 2.5 times the allowance.
Owners' corporation chairman Dickson Chau Chi-wai, who has four units in the building, said the owners were interested in the acquisition but would have to see the price.
"It is definitely not reasonable for tenants to comply with the acquisition before knowing the price," he said.