West Kowloon Cultural District Authority will tender its first residential site in the first quarter of 2027 after its deficit widened by HK$229 million to HK$998 million in the year ended March, the Authority told the Legislative Council yesterday.
The deficit was mainly attributed to increased spending in the WestK Performing Arts Centre, expanded business scope and the growth in visitor numbers, as well as greater spending on facilities management and digital technology.
Lawmaker Andrew Lam Siu-lo said the deficit is widely expected, but given the authority’s overall cost recovery rate increased from 37 percent to 40 percent and corporate sponsorship rose 30 percent, he is confident about the district’s prospects.
Lam said the stable residential and hotel commercial markets should make the first residential project in West Kowloon Zone 2B highly attractive and able to be successfully tendered in the first half of next year, adding he hopes the authority's cultural and creative revenue will improve as more WestK facilities are completed.
The Zone 2B residential site allows a maximum gross area of 108,500 square meters for residential development and about 20,000 sq m for retail, dining and entertainment facilities, while the authority is also preparing to tender the hotel, commercial, and cultural-creative integrated project in Zone 2A, next to the High Speed Rail West Kowloon Station.
Furthermore, the authority’s first public-private partnership project, the AST Development Project comprising three commercial office buildings, is expected to be completed within 2027 and will provide stable rental income, with global financial services firms such as JP Morgan already expressing interest.
Billy Mak Sui-choi, associate professor of Baptist University's Department of Accountancy, Economics and Finance, said it is very difficult for cultural projects to break even or turn a profit, and he believes the authority's overall cost recovery rate is already above average.
He added that Hong Kong property prices have been rising for some time and, given the district's prime location, he expects the Zone 2B project to become luxury housing with a strong tender value. He believes the authority can secure substantial revenue and use part of it for investment, offsetting some operating expenses in the future.
Meanwhile, the authority noted that the HK$21.6 billion one-off upfront endowment provided by the government in 2008 is expected to be fully used up by 2026/27.
Operating income excluding interest income rose 19 percent, or HK$123 million, year on year to HK$768 million, driven by a 30 percent year-on-year increase in both ticket revenue and corporate sponsorships from popular exhibitions and performing arts programs.
WKCDA chief executive Betty Fung Ching Suk-yee highlighted that Ancient Egypt Unveiled: Treasures from Egyptian Museums exhibition saw strong demand for cultural and creative merchandise, driving overall retail revenue up 24 percent year on year.
However, total underlying income, including interest income, fell by 1.72 percent to HK$856 million, which was due to a sharp reduction in the one-off funding placed in banks, Fung said, warning that related income will continue to fall as more projects are rolled out.
Regarding whether the authority will raise ticket fares in the future, Fung said standard ticket prices are more sensitive, considering costs, affordability, and public sentiment, and will be reviewed as needed, while special exhibition tickets are more flexible and priced on a case-by-case basis.
Fung also addressed concerns on operating expenses reduction, noting that the authority will neither cut nor add headcount but redeploy staff to new projects, and is seeking to retain young talent. She mentioned that senior management has been on a pay freeze for years, with only junior staff receiving raises.
The authority emphasizes that it is in a financial transition period and will continue to actively generate revenue by leveraging West Kowloon's internationalization and industrialization advantages as commercial projects roll out.
