Relaxing land use regulations would ease warehouse shortage

PUBLISHED : Wednesday, 04 February, 2015, 6:00am
UPDATED : Saturday, 07 February, 2015, 5:12pm

Relaxing regulations regarding land use for special industries such as shipbuilding and manufacturing of polystyrene plastics may be an efficient way to ease the shortage of warehouses, according to industry experts.

As these industries have largely shifted across the border, sites are underused.

In the past two years, only two sites designated for logistics and industrial purposes have been sold by the government, which mainly focuses on selling residential land to ease the city's housing shortage.

"There are three large sites in Tsing Yi South that are not fully used," said Alnwick Chan, an executive director at Knight Frank.

Of the three, the biggest one is a 3.1 million square foot site that is currently used as a dockyard for shipbuilding, ship repairing, cargo handling and storage and repair of containers.

The other two sites with areas of 129,168 square feet and 350,605 square feet are reserved for manufacturing of polystyrene plastics, and making and assembling industrial equipment.

With a plot ratio of just 2.5, these sites could yield a total gross floor area of 7.85 million square feet, he said.

"As these industries have moved to the mainland, the majority of the area is left unused. But owners have no choice because usage is highly restricted," he said.

He suggested the government relax the land use requirement of these three sites from special industrial use to "general industrial use". Once the land use requirement is relaxed, the plot ratio could be raised to 9.5 times. These sites could then free up 34 million square feet for potential redevelopment.

"Besides, addressing the supply shortage of warehouse facilities, these spaces will also help the government accommodate some of the existing industrial operators in the northeastern New Territories," Chan said.

These brownfield sites could then be freed up for housing projects, he said.

Chan's suggestion comes amid a pilot scheme to relocate existing industrial operators to multistoreyed buildings to free land in the northwestern New Territories for housing. The idea was unveiled in Chief Executive Leung Chun-ying's third policy address last month, as a way to increase land supply in the medium to long term to ease the city's housing shortage.

"The prevailing supply shortage in the warehousing sector will remain unresolved this year, which will support warehouse rents to grow further during the year," Antonio Wu, a deputy managing director at Colliers International Hong Kong, wrote in a report.