Hong Kong approves land grants to cash-strapped urban renewal body in rare move

The Hong Kong government has granted two parcels of urban land to the cash-strapped Urban Renewal Authority in a rare move to offer additional financial support for its redevelopment projects, with a condition to review its financing model to ensure sustainability.

The sites in Hung Hom and Tseung Kwan O were approved by the government’s top decision-making body in principle on Friday, at a nominal premium of HK$1,000 (US$127) for 50 years.

The two sites will have to be rezoned for residential use in order for the self-financing statutory authority to “continue to take forward its commenced redevelopment projects in an orderly manner”.

“Redevelopment projects of a larger scale involve huge acquisition costs. Coupled with the sluggish property market in recent years, the URA’s projects have been subject to the ‘buy-high-sell-low’ situation, thus affecting its cash flow,” Secretary for Development Bernadette Linn Hon-ho said in the government announcement.

“Granting land at a nominal land premium has long been one of the major government support measures for the URA … Granting the two sites to the URA is along the same direction that helps the URA to fulfil its urban renewal mission.”

The land grant includes several conditions. The URA must collaborate with the government to refine its operating and financing model, enabling it to undertake urban redevelopment in a financially sustainable manner, “irrespective of market ups and downs”.