Urban regeneration: developers play part in reviving ailing Cheung Sha Wan neighourhood

Housing in Cheung Sha Wan can be loosely divided into two residential neighbourhoods. Around Sham Mong Road, where houses are built on a long stretch of reclaimed land, including newer developments such as The Pacifica, Aqua Marine, Liberte, Banyan Garden and One West Kowloon.

These self-contained housing estates offer a range of options, from two-bedrooms to luxury duplexes with clubhouse facilities and covered access to shopping malls and the MTR station.

In the inner part of Cheung Sha Wan is a mix of modern high-rise apartments and old residential buildings, including walk-up tenement buildings. New supply in this area mainly comes from redevelopment projects such as Trinity Towers.

The newest project on the market is The Ascent, a redevelopment by Paliburg, Regal Hotels and the Urban Renewal Authority (URA), where homes are intended for smaller families – about 40 per cent of the 157 units (276-458 sq ft) are one bedroom, with the rest studios and two bedrooms.

The single-block project includes a clubhouse, which opens onto a communal garden. The developers have yet to announce pricing for the project.

In Sham Shui Po, the URA and Far East Consortium International also have a redevelopment project in the pipeline.

The project will comprise 87 units over 25 floors, and they will most likely be fitted with one bedroom or two bedrooms each, according to Venus Zhao, head of investor relations and corporate finance for Far East Consortium.

She expects the project to go on sale off-plan in the second half of next year and be completed in the second half of 2018.

A spokesman for Henderson Land Property Agency, the marketing agent for the Harbour Park project built by Hong Kong Ferry, says 87 units out of the 161-unit building sold for an average price of about HK$15,000 per square foot by the end of June. The project mainly comprises studios and one bedroom, from 183 to 286 sq ft.

Henderson Land and local estate agents are also marketing stock units at High Point, High One Grand and High One, the three other single-block redevelopment projects around the area launched for sale earlier in the year.

As Cheung Sha Wan is centrally located in Kowloon with good transport links to the central business district, rental demand is strong.

If it’s a brand new flat, it will be especially sought-after, says Victor Lau, a district manager at agent chain Ricacorp Properties.

“Young working couples, usually without children, are more willing to pay a premium rent for a brand-new flat even at a monthly rental rate of up to HK$50 per square foot,” he says.

That compares with rental rates of about HK$30 to HK$35 per square foot for a family apartment in the seafront developments. In May, the average monthly rent achieved at Taikoo Shing on Hong Kong Island was about HK$38 per square foot.

The secondary market has been largely steady in recent months, he says. “As home sellers soften their stance and are more willing to cut prices, market activity is equally driven by second-hand property sales at the waterfront housing estates.”

While there are a large number of old tenement buildings in Cheung Sha Wan and Sham Shui Po, there are a lot of factors hindering the regeneration progress, says Chris Hui, director of agency (development and investment) at AG Wilkinson & Associates, a professional firm of surveyors.

Unlike the URA-led Kwun Tong Town Centre redevelopment project, the URA plays a helping role in its demand-led redevelopment scheme.

One of the two conditions precedent for the demand-led project scheme is that owners of not less than 80 per cent of undivided shares of each lot in the project shall accept the URA’s conditional offers within 75 days.

Given this requirement, he says the majority of owners of an old building must agree to sell the site in its entirety and must accept the conditional offer made by the URA.

“If the building is owned by a relatively large number of landlords, getting 80 per cent of them to agree on the decision to sell is already a big challenge. Second, when there are many voices, they may eventually expect a price more than what the URA or a developer is willing to pay for the site.”

In a rising market there is still a chance for it to be sold as the developer expects land prices to go up at the same time. “But as the housing market is now softening, and so are land prices, redevelopment activity under the demand-led model will probably slow down significantly.”

At a recent Legislative Council panel meeting on development, Wai Chi-sing, the new managing director of the URA, admitted that there was plenty of room to improve the effectiveness of the demand-led redevelopment model.

For example, the “bottom-up” approach, in which the URA responds to owners’ requests for redevelopment, will be complemented by the “top-down” approach that factors in district-level, community-based planning.