URA communicates a win-win move

The Urban Renewal Authority is doing the right thing in bringing a long-standing policy up to date in accordance with the current property market situation.

URA managing director Wai Chi-sing announced that, starting in the new year, the authority will enhance communication with developers before formally calling a tender. If need be, it will include terms in the tender documents to reflect the views expressed by developers during the communication stage.

That will be revolutionary and unheard of in the past.

Over the years, the long-standing practice has been that the authority would withhold the details from unauthorized scrutiny until after the tender documents were written up and released to invite interested developers to submit tenders.

It is suspected that, if the new approach had been adopted earlier, the URA might have been able to press ahead with the Kai Tak Road/Sa Po Road redevelopment project in Kowloon City as scheduled and would not have had to withdraw it from the market and proceed with it on its own.

When the authority rejected the sole bid submitted by CK Asset in October, it attributed the withdrawal to discrepancies between terms proposed by the firm and the terms that the authority had set in the tender documents.

Neither party elaborated on the differences despite market talk around that time relating the matter to how risks associated with the Kai Tak Road/Sa Po Road project might be shared between the URA and the developer.

Wai stopped short of relating the communication enhancement initiative directly to the Kowloon City project but it is believed that what occurred two months ago may have factored in the authority's rethink.

Apparently, the rethink is also consistent with the flexibility that Secretary for Development Bernadette Linn Hon-ho is showing in respect of the way the administration approaches the mega Northern Metropolis development, promising developers greater freedom over the plots.

A major correction in the local property market since 2021 has effectively turned the tables to favor buyers.

On the retail level, there is plenty for buyers to choose from, with prices about one-third below the peak.

On the wholesale level, land is also being sold at levels substantially lower than before. Confronted with a large inventory of flats to clear, developers have been lukewarm to land sales, let alone the URA's redevelopment projects.

The URA is right to update its marketing strategy as it also has to compete with the Northern Metropolis project for the resources still available in the market.

In his weekly blog, Financial Secretary Paul Chan Mo-po mentioned two major uncertainties in 2025 - geopolitics and high interest rates - as he tried to remain upbeat about the economy.

Just as Chan has to take into account these two variables as he pens the next budget, property developers are similarly expected to weigh these variables as they examine the ups and downs of any projects due to be announced by the URA.

Enhancing pre-tender communication will certainly help the authority and developers understand each other's needs better and create a win-win deal for both sides.