Land sale helps Hong Kong arts hub, but long-term financing plan vital

Twenty-six years ago, the idea of having a world-class arts hub in the heart of the city was nothing more than a dream. Today, the West Kowloon Cultural District is a beloved urban oasis with renowned museums and decent performance venues.

But as the ambitious development blueprint has been materialising bit by bit, the key question to a successful arts hub remains – is it financially sustainable in the long run?

In a welcome change, the authority overseeing the project has been allowed to sell some of land for residential use, instead of following the original “Build-Operate-Transfer” (BOT) model, an approach that received lukewarm response from the market.

The authority stopped short of estimating how much money could be raised. Some analysts believe the prime site could fetch as much as HK$15 billion, which can keep the cultural district running for the next decade at least. Separately, the admission ticket for the Palace Museum has also been increased to help raise revenue.

Given the financial constraints facing the authority and the government, the land sale approval appears to be a win-win for both sides. In return, the authority is required to consult the Development Bureau on tender schedules and reserve prices, and come up with a triennial cap on operating deficits and a cap on the percentage of staff cost to the total annual operating expenditure.

The weak property market has understandably fuelled concerns whether the authority has missed the best opportunity to maximise returns. Separately, the lifting of the so-called BOT restriction has also raised questions whether the arts hub will become a property-driven development.