Hong Kong’s rising number of aged buildings need facelifts

Hong Kong’s buildings are ageing rapidly.

There are approximately 30,000 buildings aged 50 years or above, and the number is set to multiply in the next three years. These buildings are not only eyesores, but they’re also potentially hazardous.

Just last month, an aged building in Hung Hom collapsed, with concrete debris falling to the ground and a bed dangling in mid-air.

Since 2012, ageing buildings have been required to undergo statutory inspections under the government’s Mandatory Building Inspection Scheme/Window Inspection Service (MBIS & MWIS). Aged buildings are now required to be inspected by registered inspector and repair works are prescribed to make sure that they meet minimum regulatory standards and fire safety ordinance 572.

The MBIS requires renovations on these older buildings because most of them, having been built decades ago, will not meet the mandatory minimum requirements upon first inspection. Instead of renovating to meet the bare minimum requirements, CBRE recommends landlords to take the opportunity to go all the way, giving the building a full facelift to increase the capital value of the property.

According to CBRE’s intelligence, carrying out full renovations of aged buildings on Hong Kong island will easily help double the rental income, depending on the property’s location and proximity to MTR stations. Owners of aged buildings in Sheung Wan, Sai Ying Pun or Kennedy Town will benefit most from investing more in a full renovation because the upside for their rental income is promising in light of the opening of the MTR’s Island line extension. The improved accessibility and the high concentration of high-income tenants in the neighbourhood make a full renovation worthwhile.

From the tenant’s point of view, a modern building is more comfortable to live in, justifying the higher rental price.

A good example is the building located at 379 Queen’s Road Central, a property that is currently being planned for a full facelift. At the moment, the building looks drab and unappealing both inside and out, and its plain, grimy concrete façade and exposed plumbing made it look dilapidated.

A full renovation will bring the building up to code, while boosting the property’s value. Once the project is complete, the property will have an updated white exterior façade with wrap around windows and the exterior plumbing will be removed.

The interior of the building will be completely renovated with a simple yet chic minimalist design, adopting a white, black, and light brown colour scheme.

A full renovation such as this one will be more expensive than doing the bare minimal repair works to bring the building up to code. The approximate cost of this upgrade would likely cost a couple of million Hong Kong dollars, which is equivalent to just a new two-bedroom apartment in Hong Kong. Smart investors would opt for taking their renovation one step further to achieve capital enhancement.

That said, not all aged buildings are eligible for a full renovation. For buildings with more than one owner, it is often more difficult to agree to a unified renovation strategy. Buildings on a large site area should consider redevelopment instead, as the increment in property value is much more appealing.

The renovation of old buildings is not only crucial for improving the capital value and fit out of the property, it also means a lot to the community. As dilapidated buildings are replaced with modern and safety compliant buildings, the old districts of Hong Kong will get a refreshing facelift while keeping the essence of the local culture.

Ryan Wong is associate director of project management of CBRE Hong Kong