To Bet or Not to Bet
With the URA’s stringent redevelopment regulations, can developers possibly win the game?
| Text : Jennifer Lo | Photo : www.thinkstockphotos.com |
A tiny plot of land in a city with one of the world’s highest population densities can be worth billions. But surprisingly, an Urban Renewal Authority (URA) redevelopment project in Sai Ying Pun, neighbour to the city’s heart, has attracted barely half of the expected potential developers to the game.
Though the site has an estimated value up to HK$1.4 billion, only eight out of 17 invited developers, including Sun Hung Kai Properties, Sino Land and Henderson Land, are confirmed to sending in bids. The reason for saying “No” is pretty obvious to some developers. The joint venture development that includes part of Third Street, Yu Lok Land to Centre Street in Sai Ying Pun is more gamble than gold under the URA’s stringent rules set for redevelopment.
The site about 23,000 square feet, only onefourth the size of a soccer pitch, is expected to provide 270 flats, half of which must be smaller than 500 square feet — the first URA project ever providing small and mediumsized
flats. New World Development Executive Director Stewart Leung Chi-kin said in Sing Tao, the project wasn’t very attractive “after some careful calculation,” as there are too many building conditions to be fulfilled and the tiny flats could hardly be turned into luxury housing. “We’ll pass this time,” he said.
What’s scaring developers off is also the URA’s plan to preserve a pair of existing tenement buildings on the site for adaptive re-use. While there is a loud public outcry for heritage preservation these days, some
developers like Emperor International gave up the bid because the group simply lacks expertise in preservation matters and has expressed anxiety over unexplained details of the preservation work, as well as the substantial extra costs that will be incurred. The winning party will also have to share up to 50 percent of the revenue with the URA if sales go beyond $3.2 billion.
On the other hand, property giants such as Cheung Kong Group and Henderson seem to be confident with their bet. Hong Kong-based architect Stephen Ho Kin-wai suggested one plausible explanation: Developers, as a large production house, like to keep up their stock, as the supply of urban land is extremely scarce in Central and Western district and has a long history of development.
Sai Ying Pun, one of the oldest settlements in Hong Kong, was first developed by the British colonial government in reaction to the influx of large numbers of immigrants from Mainland China that resulted from the political instability of the 1850s. Because of its proximity to Central, the humble old town gradually drew new and younger tenants. According to the Census and Statistics Department in 2010, residents aged 25-29 account for the biggest adult population group under 65 in Central and Western, and this trend is likely to persist in the next decade.
“Unnoticed by many, there is in fact a market for tiny flats [smaller than 500 square feet] in the district,” says Ricky Poon, Colliers International executive director of residential sales. “There are often fresh graduates, young professionals and parents who want their kids to live nearby that would look for such a small flat. Unfortunately, there aren’t many to choose from except for Smithfield Terrace and The Belcher’s.” It’s safe to expect a property boom along the proposed MTR line down to Kennedy Town.
Whether a developer places a bet obviously involves more complications than one could possibly imagine. But one thing is certain, as Ho put it: the project is no doubt injecting new energy to the old district, which is by no means a bad thing.
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