Housing problem in Hong Kong is always the wrestle between demand and supply, where the latter has never been able to out-compete the former. As a result, there are voices urging prompt development of more houses to accommodate the growing population and stabilize the property market. Developers may either revitalize old buildings in urban districts or initiate new projects in the rural areas,and the latter appears to be more appealing to the investors. This has largely to do with the policy restrictions in urban renewal.
HIGH RESUMPTION COSTS
If you were to invest in a property development project, would you opt for constructing a new building or redeveloping an existing one? You may wonder why not the latter, it is a ready made! This misunderstanding is the gist of the shrinkage of new property in the urban district. In fact, urban renewal involves prohibitive resumption costs, ranging from compensation to demolition and reconstructing a new property. It is not only talking about monetary costs but also much time and effort. On top of these, premium payment is another vexing limitation that turns developers away from urban renewal projects.
PREMIUM PAYMENT ARRANGEMENT
Property developers are playing smart by turning consumers’ focus from volumetric development to vertical, but it comes at a price. An alteration to building height implies more flats to be housed, meaning a change in the plot ratio which requires approval from the Town Planning Board. The threshold of approval is high, where specialists will consider the outcome of population growth including traffic capacity and air pollution. After obtaining approval, developers will then have to make the premium payment. These procedural matters have made urban renewal less lucrative and attractive to property developers.
IF NOT THE URBAN DISTRICT,WHERE ELSE ARE WE MOVING TO?
A question follows, ‘If urban area is off the list, where else are we going to develop and settle in the future?’ Just when everyone thinks that urban district is our last resort, property developers are exploring the rural area in full swing. Substantial exploitation of the sub-urban areas and the limited potential left in the urban district collectively lead developers to target the rural area as their next destination,examples being Kwu Tong, Hung Shui Kiu, and Tung Chung. Along with such urban sprawl, gradual and large scale migration is an inevitable trend of property development in Hong Kong. In effect, property price in the urban area remains high due to reduced supply.