Redevelopment of Hong Kong’s older buildings must be handled fairly, or we risk social unrest
- Among the many proposals in John Lee’s first policy address is lowering the threshold for facilitating redevelopment of older buildings
- The government must act with care in undertaking such reforms, to avoid giving either owners or developers an unfair advantage
Reviving the idea of an official think tank, under the revised name of the Chief Executive’s Policy Unit, is worth exploring. The “red team” concept, in which proposals are challenged and tested internally to iron out kinks before implementation, is also exciting.
The government position that we are making progress towards elimination and that the situation is much better than before cuts no ice with outsiders. We must get back to making Hong Kong a place people want to come to see for themselves, then we can focus on making it attractive for them to stay.
All these are worthy topics, but in the end I settled on the plan to consider lowering the threshold for facilitating redevelopment of older buildings. The suggestion in the policy address is that the trigger for permitting forced sale, which was 90 per cent when the scheme was introduced in 1999 and cut to 80 per cent in 2010, should be further reduced to 70 per cent for buildings more than 50 years old, with a further lowering to 60 per cent for buildings more than 70 years old.
Property developers eye aged Hong Kong buildings in prime spots
By chance, I was the subject officer for these matters back in the 1980s, dealing specifically with compensation. At that time, the suggestion was that an owner being forced out should get the value of a second-hand, seven-year-old flat of similar size in the same area. I argued it should be the value of a new flat. I had just bought my first flat in Hong Kong and suddenly saw things from a different perspective.
Take the theoretical example of an old block with 40 flats on a site capable of holding 100. Developers and owners approach the subject from different perspectives. Developers see a major profit opportunity, owners see the loss of their homes. One views the existing property as a concrete box to be acquired and demolished as cheaply as possible, the other the largest single family investment and the centre of family life.
The location was chosen because it is attractive and convenient for work. The children go to local schools, the family shops in nearby markets, and so on. For all these reasons, the family might not wish to move at all because of the disruption.
The developer, probably using agents to hide their intentions, will seek to acquire flats close to market price. They will find willing buyers among those who wish to move for personal reasons, perhaps to a different flat or to emigrate. If they can’t reach agreement with 20 per cent of the owners, they must rethink compensation. We should not lightly change the balance between the parties or we risk social unrest.
Mike Rowse is the CEO of Treloar Enterprises