The Urban Renewal Authority issued acquisition offers to property owners affected by Ma Tau Wai Road/ Lok Shan Road Development Project in Kowloon City, while its notional unit rate at HK$14,807 per square foot based on the "Seven-Year-Old Replacement Building" acquisition mechanism evoked controversy.
This acquisition policy is to calculate a Home Purchase Allowance by bridging the gap between the market value of an owner's dilapidated flat and the estimated value of a notional seven-year-old replacement unit in a similar location.
As the majority of the buildings in this project area are approximately sixty years old, with some reaching seventy years, and one being a pre-war building, its notional unit rate represented up to 2.28 times the average market value of these ageing properties, said Ar Donald Choi Wun-hing, Managing Director of the URA.
Chan Hok-fung, non-executive director of the URA, said this acquisition policy enables citizens to get better living environments, but it will impose a significant financial burden on the URA and impede the long-term sustainable development of urban renewal.
Currently, the discussion of the mechanism in the URA primarily focused on whether maintaining the current compensation levels will allow for sustainable urban renewal, he said, adding that the recent downturn in the property market has also prompted the government to consider how to sustain the pace of urban renewal.
If capital recovery is insufficient or if a deficit occurs, it will hinder the progress of urban redevelopment and renewal, Chan said.
