URA has turned its back on local people in Kwun Tong redevelopment

Albert Cheng says the authority is failing in its basic duty to provide affordable housing in areas of urban decay, preferring to focus on profits

PUBLISHED : Thursday, 27 February, 2014, 5:06pm
UPDATED : Friday, 28 February, 2014, 2:04am

Kwun Tong is one of the oldest and poorest districts in Hong Kong. Most buildings there are, on average, between 40 and 50 years old and hence the area has been one of the biggest projects for the Urban Renewal Authority (URA) in recent years. Gentrification and the redevelopment of the area will be done in stages.

Work in the first redevelopment area is well under way. Earlier this week, the URA began work in the second and third areas, covering Hip Wo Street and Mut Wah Street. Redevelopment of these areas will comprise both commercial and residential projects. Eventually, the areas will be transformed into another Taikoo Shing - a popular residential and commercial area.

The total area for redevelopment is 230,000 sq ft, which will accommodate four blocks of between 42 and 48 storeys, providing 1,700 units of 600-800 sq ft each. The URA will set the price at HK$13,000 per sq ft, which means each unit will cost at least HK$7.8 million.

The bottom four floors, or podium levels, will be used for commercial purposes, a bus terminus, community and government facilities and public leisure areas.

To add sweeteners to attract property developers, the URA took the unprecedented step of subsidising the project to the tune of HK$1.7 billion. The money will be used to build the podium levels for public services.

The URA is a product of the Tung Chee-hwa era. Its predecessor - the Land Development Corporation (LDC) - was known for demolishing old buildings for redevelopment. It had the power to work independently with property developers, leaving it open to accusations of transferring benefits to big businesses.

The corporation used market prices to buy up old buildings, but set the compensation benchmark at the price of seven-year-old buildings in the area. The same compensation rule is still being used today.

In 2001, Tung set up the URA as a statutory body to replace the LDC and injected HK$10 billion, but the URA still operates under the same business model and works closely with property developers on redevelopment projects.

Over the past few years, all URA residential projects in Wan Chai and Tsim Sha Tsui have been luxury developments, selling at HK$18,000 per sq ft at least. The highest price was HK$53,000 per sq ft. Now that it is redeveloping one of the poorest districts in Hong Kong, the authority has totally ignored the wishes of local residents wanting to be rehoused in the same district and own their homes.

It has chosen not to provide affordable housing for local residents, but instead to focus on reaping profits by building luxurious units with private developers. This goes against the fundamental principles of gentrification of old districts.

It is absurd to see the URA handing over HK$1.7 billion of public money to subsidise private developers.

Even though the URA will retain ownership of the four levels of the podium, there is no need for it to pay for its construction.

First, if developers couldn't see a profit in a project, they wouldn't take it on - even with government subsidies. Second, the construction of the podium to include public facilities and a transport hub offers the benefit of expanding the plot ratio to allow developers to add more floor space as a form of compensation.

More than 3,000 buildings in Hong Kong are at least 50 years old, and over the next 10 years, 500 more will join the ranks each year.

If we don't want to see a repeat of the Ma Tau Wai Road tenement building collapse in 2010, in which four people were killed, then urban redevelopment needs to be speeded up.

As a statutory body, the URA needs to be financially self-sufficient, and hence it is understandable that it has to make a profit. But it can't abandon its founding principles and commitments to address our acute urban decay problem and improve the living conditions of residents in dilapidated urban areas. The URA must reinvest its profits in the regeneration of old urban areas.

The Kwun Tong redevelopment goes against these principles in every sense.

Indeed, urban redevelopment should not be treated as an isolated issue. It should be an intrinsic part of the government's land allocation and long-term housing strategies.

Strangely, our chief executive has continued to allow statutory bodies that handle housing policies to operate independently without mutual co-ordination to achieve optimal outcomes.

The question we should ask is: have these bodies been given carte blanche to do what they want and take whatever they want from the people of Hong Kong?

Albert Cheng King-hon is a political commentator. [email protected]