By Alvin Leung
Urban decay is serious in Hong Kong. According to the database of private buildings in Hong Kong by the Home Affairs Department1, there are about 41,500 buildings in Hong Kong in 2022 with approximately 19 per cent aged 50 years or above—this in light of the fact that reinforced concrete buildings only have a lifespan of 50 years. Since many old buildings lack proper maintenance and management, along with unauthorised building works and illegal uses, and appalling hygiene conditions, these could lead to various social problems.
URBAN REDEVELOPMENT CAN WELL TACKLE URBAN DECAY
Redevelopment of old buildings can alleviate urban decay. The Urban Renewal Authority (URA) has partnered with private developers to carry out redevelopment projects that successfully transformed local communities, including Langham Place in Mong Kok; Citywalk and Vision City in Tsuen Wan; and the on-going Kwun Tong centre redevelopment projects. Private developers also play an important part in district transformations, such as Taikoo Place in Quarry Bay and various composite residential and commercial developments in Tai Kok Tsui.
IMPORTANT LAND SOURCE FOR HOUSING
Residential land supply is limited in Hong Kong, especially in core urban areas. Redevelopment of old buildings is an important source of land for housing. Unused plots can be released through redevelopment, which also echoes the Government’s policy to optimise underutilised sites.
The Government has been trying to locate more developable residential sites in the urban area in the past years, but only a limited number of sites were identified. Moreover, the scale of governmental tender sites in the urban area was relatively small and they were not suitable for redevelopment. The URA has also initiated various urban redevelopment projects in Kwun Tong, Tsuen Wan, Tai Kok Tsui, Sham Shui Po, To Kwa Wan, and more recently, Mong Kok and Kowloon City. Given the resources and manpower of the URA, the project scale can be large. After the URA has assembled the sites, they will put them out to tender and many interested developers are willing to pay competitive tender prices.
Urban redevelopment can provide land readily available for development without the need to build additional infrastructure, including transportation, drainage and electricity.
Due to limited urban sites and aggressive tender processes, many private developers have shifted their focus to strata-title acquisition of old tenement buildings. Strata-title acquisition usually requires more effort and time but developers can purchase sites at lower than market prices. For instance, LOFTER Group purchased a 7,500-square-foot site at Nos. 1-15 Ki Lung Street at a total consideration of approximately HK$627 million, representing an accommodation value of only HK$9,289.
Director of Investment Management, LOFTER Group
Alvin is responsible for the group’s fund management and asset management business with eight urban redevelopment projects undergoing in Hong Kong. Prior to joining LOFTER, Alvin had extensive exposure and over 10 years of experience in valuation and capital markets in an international consultancy firm. Alvin is a member of the Hong Kong Institute of Surveyors (HKIS), the Royal Institution of Chartered Surveyors (RICS), the Appeal Tribunal Panel (Buildings) under the Buildings Ordinance as well as a council member of the HKIS General Practice Division. Alvin was awarded the Young Surveyor of the Year in 2019 by RICS Hong Kong.