Land exchange option could reinvigorate Hong Kong's urban renewal
Francis Neoton Cheung says it would spur developers to initiate projects and ease focus on bottom line
Statutory bodies are not all created equal. Some, like the Consumer Council, are welcomed by the public because of its clear mission, while others are born with inherent identity issues. The latter category is perhaps best represented by the Urban Renewal Authority, which is primarily tasked with upgrading Hong Kong's ageing neighbourhoods.
Its struggle for a sharper identity focus recently came to a boil when its managing director resigned over purported differences with the chairman. At the heart of the debate is URA's struggle to reconcile purpose with profit.
Frequent haggling with affected owners occurs over the URA's method of assessing the compensation based on the value of a notional seven-year-old flat in the vicinity. The URA has also been branded an aggressive developer for projects such as Wan Chai's Lee Tung Street, the so-called "Wedding Card Street", which has forced the body to shift to a more passive approach that relies on property owners initiating redevelopment.
Finally, there's the financial viability of the URA, given current market conditions. While the body has enjoyed bountiful revenues since its founding in 2000, more than doubling the initial government investment of HK$10 billion into a capital and reserves accumulation of about HK$24 billion, future income is in doubt and it has run a deficit in the past two years. The reason: soaring construction costs and the dwindling number of old urban buildings with high redevelopment potential.
Yet the need for the URA is as pressing as ever. Currently, there are more than 4,000 buildings in Hong Kong aged 50 or older, with the number expected to increase in the next decade. Out of the 4,000 now, about 3,000 are in a serious state of disrepair.
What is the most effective way of renewing ageing urban landscapes with low redevelopment value, like Cheung Sha Wan's Kim Shin Lane, or other dilapidated buildings in San Po Kong and Sai Wan Ho?
It's time to resolve the identity crisis once and for all, so the URA can more effectively serve its function. The solution: a strategic retreat from property development through the reintroduction of land exchange entitlements.
