After fatal fire, Hong Kong leader Carrie Lam considers relaxing rules on lower floors of industrial buildings to boost safety

Top official says aim is to remove incentives for illegal, hazardous operations

PUBLISHED : Tuesday, 15 August, 2017, 10:01pm
UPDATED : Tuesday, 15 August, 2017, 10:48pm

Small businesses operating illegally in Hong Kong’s industrial buildings may get a second chance as the city’s leader considers relaxing the use of their lower floors.

Chief Executive Carrie Lam Cheng Yuet-ngor’s announcement came after a fire on Saturday in a 45-year-old industrial building in Kwai Chung that killed three people. The tragedy sparked a debate over reviving the city’s old factory buildings, which are in keen demand among small businesses due to their lower rent.

Lam said on Tuesday the government had been studying resuming a scheme to allow a single owner of an industrial building to change a building’s use without having to pay a hefty premium.

She added the government would review a compulsory sale regulation to better facilitate industrial building renewal.

“I am deeply saddened by the death of the three young people caused by the fire in Mai Sik Industrial Building in Kwai Chung,” she said. “The hidden problems of industrial buildings have plagued Hong Kong a great deal.”

The chief executive said one solution was to study relaxing the restriction on using the lower floors of these buildings, provided their design and facilities could meet fire safety standards.

Lawrence Poon Wing-cheung, a housing policy academic and Town Planning Board member, believed industrial buildings were ideal venues for recreational and sports businesses due to their larger spaces and affordable rent.

If the government relaxes the use limit, it will be win-win for both business operators and the public
Lawrence Poon Wing-cheung, Town Planning Board

But under existing regulations, he said, many such businesses had to operate illegally and in daily fear of government crackdowns. This fear meant they were less willing to invest in good-quality, fire-resistant indoor designs.

“If the government relaxes the use limit, it will be win-win for both business operators and the public,” he said. “It’s a good way of releasing land resources to businesses the public really needs.”

Chow Chun-fai, a spokesman for Factory Artists Concern Group, said its members had been urging officials to recognise the arts as an industry and allow artists, who have increasingly moved into factory buildings for their relative affordability, to legally use lower floors when there were adequate fire escapes and other safety facilities. He hoped the government would not leave artists out this time.

But Chow strongly opposed the plan to allow single owners to convert industrial buildings for other purposes without having to pay a premium.

The scheme debuted in 2009 but was suspended in March last year amid rising criticism it had led to exorbitant rents in industrial buildings.

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Chow also worried officials would further lower the compulsory sale threshold. Under existing rules, an owner of an industrial building built at least 30 years ago in a non-industrial area must acquire ownership of at least 80 per cent of the entire building before being able to force the other owners to sell their property.

The threshold was lowered from 90 per cent in 2010 to encourage building redevelopment.

Chow said prices had gone up by up to 80 per cent in the first two years of the programme after many major developers transformed the buildings into upscale offices or shopping malls.

He said the results were too expensive and too businesslike for music workshops.

Further lowering the threshold, he added, would enable major developers to buy off industrial buildings and convert them.

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“I am quite concerned the government will use the [Kwai Chung] fire to forcefully gentrify industrial buildings in the name of safety,” Chow said. “Only big developers are able to participate in the programme and only conglomerates will benefit from it.”

However, Poon countered that relaxing the compulsory sale conditions would benefit many small owners of old industrial buildings, as developers would pay them based on the units’ redevelopment value, which could be much higher than their current market prices.

He added that revitalising industrial buildings would expand the supply of much sought-after commercial spaces, which would eventually benefit tenants in an open market.