Following is a question by the Hon James Tien and a written reply by the Secretary for Development, Mr Paul Chan, in the Legislative Council today (July 3):
Question:
Quite a number of members of the business and industrial sectors have relayed to me that the inadequate supply of commercial sites over the past few years has caused the prices and rent levels of commercial properties, such as offices of various grades, shops and hotels, to rise continuously due to the shortfall in supply, resulting in higher business operation costs and commodity prices. In this connection, will the Government inform this Council:
(a) of the respective areas of commercial sites put up for sale/made available for application for sale and those sold by the Government, as well as the floor area for commercial uses involved, in each year since 2000 (with a tabulated breakdown by type of commercial use);
(b) of the number of commercial sites to be put up for sale and the floor area for commercial uses involved in each year from 2013-2014 to 2017-2018, according to the Government's projection (with a tabulated breakdown by type of commercial uses);
(c) whether it has studied the impact of the supply of commercial sites in the past decade on the prices and rent levels of various types of commercial properties; if it has, of the details; if not, the reasons for that;
(d) whether it has assessed the demand for various types of commercial sites in the coming decade; if it has, of the details; if not, the reasons for that;
(e) given that the Government plans to convert the current government office buildings and "Government, Institution or Community" sites in Central and Wanchai for commercial uses, develop a commercial district on the north of the Airport Island, and continue to take forward the transformation of Kowloon East into a new core business district of Hong Kong, of the anticipated commencement and completion time of such projects respectively, as well as the floor area for commercial uses which will be provided (with a breakdown by type of commercial uses); and
(f) as the Chief Executive has mentioned in the 2013 Policy Address that the "Government will address the shortage of commercial land supply in a holistic, innovative and decisive manner", of the specific plans the authorities have in place to tackle the shortage of commercial sites, other than those initiatives mentioned in (e), as well as the objectives and timetables of such plans?
Reply:
President,
To maintain Hong Kong's position as a leading financial and commercial centre, the 2013 Policy Address has set out that the Government would continue to adopt a multi-pronged approach to increase the supply of commercial land and facilities so as to facilitate the further development of different economic activities, thereby supporting the continued economic growth of Hong Kong.
My reply to the question raised by the Honourable James Tien is as follows:
(a) The area of sites for various commercial uses (including hotel and office) available for sale in the Land Sale Programme from 1999-2000 to 2013-2014, the area of such sites sold and their maximum gross floor area (GFA) permissible for commercial uses as at June 17, 2013 are set out in the Annex. It should be noted that, depending on the lease conditions and other applicable requirements, the actual commercial GFA provided by individual developers may not be the same as the figures set out above.
(b) The 2013-14 Land Sale Programme (LSP) offers a total of nine commercial/business sites, which are capable of providing about 330 000 square metres of GFA. In the first two quarters of 2013-14, the Government has sold/will sell two commercial/business sites, which are capable of providing about 67 000 square metres of GFA. The outcome of the Government's sale of land is subject to market factors. The Government does not estimate the number of commercial/business sites expected to be sold and the commercial floor area involved after 2013-14. The Government will continue to announce the annual LSP in each financial year and set out sites anticipated to be available for sale, and make quarterly announcements of sites to be made available for sale in the respective quarters in advance. This provides a transparent and certain land supply programme to the market, and at the same time allows the Government to respond to market demand and adjust the pace of land sale, in order to maintain a steady supply of land to the market.
(c) The change in commercial land supply may affect the demand and supply balance of commercial properties (including offices, shops and hotels, etc.), thereby affecting their rents and prices. Nevertheless, prices and rents of commercial properties are also subject to the influences of other factors, including the local macroeconomic performance and inflation, operating situations of different sectors, interest rates and international capital flows, etc. In this connection, the Government has not carried out any specific study on the impact of the supply of commercial sites in the past decade on the prices and rents of various types of commercial properties.
(d) The Hong Kong 2030: Planning Vision and Strategy (HK2030 Study) provides a long-term planning strategy on various types of land uses. According to the forecast of the HK2030 Study, the Central Business District Grade A office space has to increase by 2.7 million square metres in GFA from 2003 to 2030 in order to meet market requirements. As regards other commercial uses (such as the retail industry and offices of other different grades), since their development is essentially market-driven and their land demand is more sensitive to market fluctuations, we have not made any estimate of the demand for these commercial sites in the next 10 years.
(e) and (f) To meet the housing and various other needs of Hong Kong residents, the 2013 Policy Address has clearly set out the Government's overall policy blueprint for increasing land supply in future, which includes commercial sites and facilities. Apart from continuing the proactive land sale approach to increase the supply of commercial/business sites, the Government is actively implementing a series of measures as described in the following paragraphs with a view to increasing the supply of various commercial sites and facilities.
First, the measures on energizing Kowloon East will help develop Kowloon East into another core business district of Hong Kong and in turn increase office supply. According to the 2013 Policy Address, Kowloon East has the potential to supply an additional office floor area of about 4 million square metres. To expedite the process, we are considering relocating the existing government facilities in the two action areas of Kowloon East and making available some vacant and appropriate sites in the action areas to the market as soon as possible. It is expected that these two action areas will be able to provide about 500 000 square metres of floor area in total for office and other uses. The Government plans to put on sale a vacant government land site in the action area of Kowloon Bay in the 2013-14 financial year. The said site will be made available to the market upon approval of rezoning.
Besides, in the Kai Tak Development Area, 14 sites are zoned "Commercial" under the Kai Tak Outline Zoning Plan. Five of them are located at the Kai Tak City Centre on the North Apron area, another three are in the South Apron Corner at the Kowloon Bay waterfront, and the remaining six are located in the Runway Area. These sites, with a total area of about 14 hectares, are reserved for commercial uses, including office, shop, hotel, etc. They will be made available to the market by phases after the relevant infrastructure works are progressively completed.
To tie in with the transformation of Kowloon East into a business district and meet the public expectation for increasing housing supply in urban areas, we are reviewing the land use planning in the Kai Tak Development Area, including exploring the scope for increasing office and housing supply in the North Apron area, the South Apron area and the former Runway Area, without compromising the planning vision and the land supply in the coming five years. The Government will conduct a detailed technical study to assess the impacts on the neighbouring areas from the environmental and traffic aspects, etc. Public consultation will be carried out when the results of the study are available.
Hong Kong International Airport is vital to Hong Kong's economic development. To support the long-term economic development of Hong Kong, we will ensure the optimal use of the limited land on the Airport Island. The Airport Authority (AA) is now carrying out a study on the development strategies of the north commercial district of the airport. Relevant planning work is expected to be completed in late 2013. In mapping out the development strategies of the north commercial district, AA will take into account the planning of the three-runway system, so that the whole development can attain maximum economic benefits.
In long-term planning, the Planning Department will examine the further development opportunities in the New Territories North, including the areas along major transport routes near Lok Ma Chau and Man Kam To Control Points, and the development corridor along the connecting road leading to the new Liantang/Heung Yuen Wai boundary control point. We will also examine the opportunities for commercial development at these development corridors. The Government plans to appoint consultants in early 2014 for undertaking the relevant study. Besides, the Tung Chung New Town Extension Study, currently undergoing the public engagement process, has also recommended taking advantage of the transport infrastructure in North Lantau, especially Tung Chung, to provide land for commercial development.
Furthermore, under the long-term planning for the New Central Habourfront, we expect that over 130 000 square metres of new floor space will be provided for retail uses, of which about 100 000 square metres of new floor space for retail uses will be within Site 3. The said planning will also provide about 90 000 square metres of new floor space for office use. The planned development will gradually commence upon the completion of the relevant infrastructure works and relocation of existing facilities in Central and Wan Chai.
At the same time, we are also planning to commence a pilot study on "Underground Space Development in the Urban Areas" the soonest in end 2013 to further explore the potential of developing underground spaces in the urban areas of Hong Kong. Our main objectives include creating more urban areas for commercial or other developments; and enhancing connectivity of the urban areas through linking of existing and planned buildings and facilities with underground developments. The study will identify some representative areas for detailed assessments.
Furthermore, the Government announced in October 2009 a set of measures to facilitate the redevelopment and wholesale conversion of old industrial buildings. These measures came into effect on April 1, 2010, aiming at providing more floor space for suitable uses to meet Hong Kong's changing social and economic needs. Up to the end of May this year, the Lands Department approved 70 applications under the measures, and the projects concerned have a capacity to provide a total GFA of about 700 000 square metres of converted or new floor space for different non-industrial uses.
Meanwhile, the current government accommodation policy is to relocate, if feasible, government offices which are not location bound out of high-value areas (including core business districts), and as far as possible make use of government-owned properties to reprovision government offices accommodated in leased premises. This will not only provide long-term office accommodation for the departments concerned, but will also reduce rental expenditure. The properties so released will in turn help increase the supply of commercial office space, thereby facilitating the development of different types of economic activities.
Recent initiatives in this connection include the sale of government-owned properties covering a portion of the 3rd floor and the whole of the 4th, 5th and 6th floors of Citibank Tower, No. 3 Garden Road, Hong Kong (which was formerly used by the Legislative Council Secretariat as its office). The Government already signed the Sale and Purchase Agreement in May this year. Upon completion of the transaction, about 6 200 square metres of Grade A office space in Central will be available in the market for commercial uses.
Besides, similar initiatives of releasing office space by the Government in the next few years include:
(1) Relocation of the Trade and Industry Department (TID): The Government is now carrying out the construction works for the Trade and Industry Tower at the Kai Tak Development Area, which is expected to be completed by end 2014. Upon relocation of TID to the new tower, more than 18 000 square metres of floor area in the Trade and Industry Department Tower in Mong Kok will be released for commercial uses. Meanwhile, among the 33 000 square metres in net operating floor area of the new tower, about half will be used for reprovisioning of government offices accommodated in leased premises mostly in South East Kowloon;
(2) Relocation of the Department of Justice (DoJ) to the former Central Government Offices (CGO): Upon relocation of DoJ to the former CGO by stages starting from 2015, its existing offices in the Queensway Government Offices (QGO) and leased premises will gradually be vacated. Offices vacated in QGO will mainly be used for reprovisioning of other government offices currently accommodated in leased premises in Central and Admiralty;
(3) Reprovisioning of the three government office buildings at the Wan Chai waterfront: The Government is now actively planning for the reprovisioning of the three government office buildings at the Wan Chai waterfront and gradually moving the affected departments to the new government office buildings in non-core business districts. After the completion of the new government office buildings, we will arrange for the departments to move out of the three government office buildings at the Wan Chai waterfront by stages such that the vacated floor area can be released as soon as possible for renting out, thereby increasing the supply of Grade A office space in Wan Chai. After the completion of the entire relocation plan, we will consider putting the three government office buildings on sale at an appropriate time. It is expected that 175 000 square metres of floor area will then be made available for commercial uses; and
(4) Construction of the West Kowloon Government Offices (WKGO): The proposed WKGO will provide a total net operating floor area of 50 000 square metres, of which about 30 000 square metres will be used for reprovisioning some of the offices of the Buildings Department, Civil Engineering and Development Department and Transport Department which are currently accommodated in leased premises in Wan Chai, Tsim Sha Tsui, Mong Kok and Kwun Tong. It will also provide office space for reprovisioning other departments in the three government office buildings at the Wan Chai waterfront.
Furthermore, the Government plans to convert suitable "Government, Institution or Community" (G/IC) sites in the existing core business districts, including the Murray Road Car Park in Central and the Rumsey Street Car Park in Sheung Wan, to commercial uses. Where possible, the Government will promptly release other suitable G/IC sites for commercial uses.
In conclusion, the Government will continue to monitor closely the demand and supply situation of commercial sites and facilities in Hong Kong, and proactively pursue appropriate land use planning, relevant urban design, district enhancement works, and convenient transport networks, with a view to meeting the market demand and continuing to strengthen Hong Kong's competitiveness.
Ends/Wednesday, July 3, 2013
Issued at HKT 15:23