Zoning in on new-normal office reality

The plan to rezone five commercial sites at Kai Tak for residential use will help Financial Secretary Paul Chan Mo-po narrow the budget deficit gap in the short term - and could have greater implications in the long run. Chan can readily generate billions of dollars from land sales. So it's not a...

Mary Ma

Friday, February 26, 2021

The plan to rezone five commercial sites at Kai Tak for residential use will help Financial Secretary Paul Chan Mo-po narrow the budget deficit gap in the short term - and could have greater implications in the long run.
Chan can readily generate billions of dollars from land sales. So it's not a bad idea to claw back some of the prime Kai Tak sites for more lucrative deals to make up part of the budgetary shortfalls - a target that can be achieved with confidence.
Li Ka-shing's CK Asset recently secured what was supposedly the last Kai Tak lot for a significant sum of more than HK$10 billion.
It was a vote of confidence in the luxury homes market - facing Victoria Harbour, the former runway is ideal for this sector.
In this sense, the government plan to rezone the commercial sites for residential purpose hardly comes as a surprise.
However, it would have been even more reassuring had the administration taken the decision in light of the global shift in people's work life.
Before the pandemic, it had been the policy to provide land to meet both housing and commercial needs with, of course, the majority going to residential.
An important piece of the puzzle, however, has been the government's ambition to create a second central business district in East Kowloon to ease congestion in the prime business district in Central, where top-grade office space was in short supply.
That was the case before the Covid pandemic.
The revelation that the government may change the use of five Kai Tak sites from commercial to residential signals that officials may have started to recognize that the pandemic may rendered that strategy obsolete.
As a result of this, the flight to create a new business district along the former Kai Tak airstrip in East Kowloon will have to be adjusted for an early landing, which is only appropriate.
And what is the point of continuing to build new office space that companies no longer want?
Just a couple of days ago, HSBC said it was going to reduce its office space by half globally. It will not need as much space to accommodate its entire workforce under what it calls a hybrid approach to let its employees work two to three days a week in the office and two to three days at home.
It's a sensible policy. On the one hand, it costs less to rent office space; on the other hand, it allows staff to keep interacting face-to-face.
Standard Chartered has a similar policy encouraging staff to split their time between working in the office and from home.
It has also gone further with a deal with multinational serviced-office network IWG to give its employees access to hundreds of offices around the world, making it possible for staff to work near home with office support.
The pandemic has already transformed the way white-collar work can be done.
After rezoning the Kai Tak sites, the government may also have to review its land sale programs in the medium and long term to take into account this new normal.