The government's acquisition offer for the Wang Fuk Court flats is "reasonable" as it could provide affected residents with ample relocation options, said Tony Wan Wai-ming, president of the Hong Kong Institute of Surveyors.
His comments on a Sunday radio program came in response to the government's announcement on the resettlement plan for Wang Fuk Court residents after the tragic inferno, allowing them to choose between a cash buyback of their flats or a "flat-for-flat" exchange.
The government will spend around HK$6.8 billion to acquire ownership of 1,736 units across seven fire‑damaged blocks, involving HK$4 billion in public funds.
While some residents prefer to rebuild the housing complex, Wan estimated that the eight blocks of Wang Fuk Court encompass a total gross floor area of about 900,000 square feet. With a reconstruction cost of approximately HK$3,000 per square foot, the preliminary estimate for rebuilding on the original site stands at around HK$2.7 billion.
Wan described the acquisition price as "reasonable and relatively high," noting that it offers residents ample options for relocation. He said that the offer includes a certain "ex gratia allowance" component and exceeds the market price before the fire by about HK$6,000 to HK$8,000, enabling residents to relocate within the same district or to other areas.
He added that the government's approach is to achieve a balance between prudent financial management and empathy for public sentiment.
Wan said the highest building structure insurance coverage for the property was HK$2 billion, a significant shortfall compared to the reconstruction cost. He explained that the amount is based on the depreciated replacement cost, covering only the building's structural value and excluding land value, rendering it inadequate for reconstruction expenses.
Meanwhile, the chief executive of the Hong Kong Federation of Insurers Selina Lau Pui-ling stressed that the home insurance purchased by residents is different from the building structure insurance bought by the owners' corporation.
She said many residents have already received prompt assistance from their home insurance after the fire, including allowances for alternative accommodation. The residents personally own the payouts, and they will not need to return any home insurance benefits even if they accept the government's acquisition offer.
As for the HK$2 billion building structure insurance, Lau noted that the compensation is directed to the owners' corporation or its receiver, intended to "restore" the building to its pre-fire condition, rather than being distributed evenly among residents.
If residents sell their ownership to the government, the rights to claim under the insurance policy will transfer to the government, which will manage discussions with the insurance company.
