The scheme is designed to encourage private urban renewal and incentivise developers to redevelop the city’s rapidly ageing residential buildings.
Under the new scheme, developers looking to tear down and redevelop ageing residential buildings in seven target districts, considered among the city’s oldest neighbourhoods, can obtain an additional 20 percent premium-free gross floor area bonus to enhance the financial viability of these redevelopment projects.
But the buildings must be at least 50 years old and the site must be at least 700 square meters.
Speaking in an interview with RTHK, Hannah Jeong, executive director and head of valuation and advisory Services at CBRE Hong Kong, said the initiative would inject “positive” momentum into the city’s urban redevelopment.
“I think the 20 percent bonus ratio is quite attractive, technically they [developers] are getting something to compensate their costs, but we’ll have to see how many sites can be the candidates? ” she said.
“We may not see the immediate impact yet, but this will stimulate them to proactively look at whatever is available in the market, and they can consolidate as much as possible to go into the next phase,” she added.
Echoing Jeong, Lau Chun-kong, managing director at Colliers, said the move is an “important initiative” to enhance the redevelopment potential of certain old buildings.
“It’ll attract developers or landowners who have previously assembled some sites, but have not completed the projects yet,” he told RTHK.
“If they have completed or purchased half of the site in terms of ownership right now, with the new initiative, they would have higher land value to support or to subsidise the acquisition of the old units,” he added.
Specifically, the seven major old districts include Cheung Sha Wan, Ma Tau Kok, Mong Kok, Sai Ying Pun and Sheung Wan, Tsuen Wan, Wan Chai, and Yau Ma Tei.
Developers committed to redeveloping qualified old residential buildings into new homes would get the 20 percent bonus in floor space free of charge.
They can also convert the bonus into a land premium credit that can be used in other land deals in the Northern Metropolis or elsewhere in the SAR.
The scheme takes effect from September 1 and is slated to last for five years.