Government may have set precedent with premium discount to preserve Tiger Balm mansion and gardens
Cheung Kong (Holdings) has increased the size of its Tiger Balm Gardens residential redevelopment in Tai Hang by about 10 per cent by including neighbouring Government land.
According to the Lands Department, Cheung Kong has the rights to build a maximum gross floor area of about 509,000 square feet.
The original limit of 467,000 sq ft was based on a maximum plot ratio of five times for sites falling within the zoning of Residential Class B in the area.
Cheung Kong bought the property, spanning a site area of 93,400 sq ft, from Sing Tao Group former chairman Sally Aw Sian for HK$100 million in 1998.
A Government official said the developer had secured additional redevelopment area by applying for a land exchange to combine neighbouring Government land in its project. Cheung Kong also obtained a concession in land premium charged for the residential redevelopment in a deal with the Government under which it would surrender the Haw Par Mansion and its private garden, part of Tiger Balm Gardens.
The 66-year-old mansion and the private garden would be preserved and declared a monument under the Antiquities and Monuments Ordinance.
The Lands Department charged Cheung Kong a premium of about HK$945 million, representing an accommodation value of about HK$1,850 per sq ft - about 10 per cent lower than market expectations.
The Government official would not disclose the reduced amount in land premium, but said it was equal to the Government-estimated value of the Haw Par Mansion and private garden.
The handover of Haw Par Mansion and garden makes the final site for Cheung Kong's redevelopment smaller, despite the inclusion of adjacent land.
The official said it could be argued there was a transfer of plot ratio for the project because the redevelopment site was smaller, but the total gross floor area was the same as the original site.
A spokeswoman for the Lands Department said: 'This is the first time heritage has been preserved through land premium forgone.'
She said this case was a one-off and would not prejudice the outcome of the heritage policy review being undertaken by the Home Affairs Bureau.
She explained the 'premium forgone' was necessary because development value would be affected as a result of preserving the mansion.
But analysts said the Tiger Balm case would set a precedent of Government willingness to forgo land premium in part and permit additional redevelopment space as incentives for developers to preserve historical buildings.
Surveyor Samson Wong San said the preferential land premium charged for the redevelopment of Tiger Balm Gardens was definitely a precedent for the heritage policy review. He expected other developers would fight for similar terms in surrendering historical buildings for preservation.
Tiger Balm Gardens was declared a Grade Two historical building and the Antiquities Advisory Board advised to preserve it, but Cheung Kong had wanted to demolish it for redevelopment.
The Antiquities Advisory Board submitted a proposal for the Government to enhance preservation of heritage. Incentives to encourage developers and owners to retain historical buildings include reducing land premium, transfer of plot ratio and providing bonus plot ratio. Mr Wong said the Government could follow examples in Canada and Australia to permit transfer of plot ratio to enhance preservation of historical buildings.
