Hong Kong Apartments Crisis to be Solved by Redevelopment of Urban Projects

Hong Kong Apartments are in short supply largely due to the limited area of premium land on which they can be built. Now however, a new scheme is being initiated to help resolve this issue.

Orion Court was constructed at Kowloon Tong for Civil Servants under the Cooperative Building Scheme (CBS) in 1960. In a first of its kind move, 13 of the 16 Hong Kong apartments in the four storey building have been offered on sale through tender action at an indicative cost of HK$600 million (US$76.54 million). The historic step is aimed at maximising the efficient use of urban land through redevelopment, which could generate thrice the gross floor area presently utilised.

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In the 67 years of existence of the CBS, this is the first time that houses have been tendered out for sale. Colliers International is the lone agent for the project; their senior director, Kenny Kwok stated that, “If the tender is successful, it’ll attract others also soon”. He further added that Orion Court is likely to be redeveloped into a 13 floor project, which will increase the gross floor area to 60,000 sqft with a total sales value of HK$2.4 billion (HK$40,000/sqft). The buyer will have to finalise a deal with the balance three owners before commencing the redevelopment project. Historically, however it used to be an even more time consuming and uneconomical proposition as the builders had to buy individual flats. If good profits are made, this could mark the beginning of a new procedure.

According to the SCMP the Knight Frank director, Alnwick Chan said that the redevelopment of such buildings will serve as fresh project sites for builders and relieve the housing crisis in Hong Kong. Chan further added, that the ageing owners are looking to sell away their Hong kong apartments, if good prices are offered. The CBS scheme launched in 1952 offered discounted land (at 2/3rds of its market value) to Civil Servants cooperative societies. This coupled with cheaper loans enabled the Civil Servants to get huge Hong Kong apartments at relatively much lower costs.

As per government records, out of a total of 238 cooperative societies, 191 had already been dissolved selling away projects for redevelopment by 31st July. As revealed by the Development Bureau statistics, 12 projects have been completed, wherein 600 flats were cleared to make 3,800 units. Another 4,300 houses are in the pipeline by razing 179 CBS projects amounting to 2,28,000 sqm area. Creating more space for Hong Kong apartment for rent and sale, this will surely take care of the housing crisis with Hong Kong apartments.

Chan stated that redevelopment of projects in urban areas fructify much faster than other country localities like farm houses etc. This is so because the area is already approved by town planning. The builder has to just seek permission to relax plot ratio and to remove restrictions. The Urban Renewal Authority or the URA is undertaking the macro level planning to identify suitable sites for redevelopment projects. Pilot projects are likely to be announced this year.