The property market in Hong Kong continues to be bullish. As a result, the Hong Kong government has carried out a series of housing policies that has been catching public awareness and debate, including the introduction of a new policy for the revitalisation of industrial buildings.
Looking at years of transformation within the industrial all the way to the service industries, the increasing number of vacated industrial buildings is an indisputable fact.
In recent years, the demand for space is growing due to economic changes and development.
There is also a growing trend of illegal usage of industrial buildings for other purposes.
The government introduced the policy of revitalising industrial buildings which apparently, should be a win-win policy favoured by property owners, tenants and the community.
However, there are still some people who are against this policy, and I would like to explain the rationale behind it:
1 This policy favours single title owners. This type of industrial building ownership can apply for nil waiver fees immediately through Lands Department (for modification of buildings usage). On the other hand, for industrial buildings with diversified ownership, all minority owners have to reach consensus in order to proceed. Therefore, it is quite suspicious that the policy is partial to the wealthy group.
2 This policy is ultimately designed to provide cheap rental space, however, the value of the property increases under this policy and thus adversely affects the existing tenants.
Taking into account both conversion costs and the potential increase in property values, escalating rents are not an assumption but fast becoming a fact. The tenants suffer from this policy and succumb to the pressure of paying higher rents.
3 Finally, the utilisation of space becomes restricted as the usage of buildings must be specified on the modification application on top of customized renovations. Building space is no longer flexible to meet the different needs of tenants when the market
changes, not to mention converting buildings for other uses at a district level to meet market demands.
Overall, the government’s courage, sincerity and dedication are appreciated by the general community – regulating illegal land use to cater to the needs of new industries. I share the same will with the general public and hope that the government will not only retain stability and continuity of this policy but also take into consideration the community’s comments and feedback. All together, it can help improve the maturity of this policy and ultimately, help to achieve the realisation of a good long-term development of Hong Kong.
Vincent Sung
RICS
Member, External Affairs and Public Concerns Committee, RICS Hong Kong