Industrial market treasure hunt
Chief Executive Lin Zhengyue proposed in the “Policy Report” last year to restart the activation of the industrial building plan, which will drive a new round of industrial building procurement boom. As the trade war heats up and the Hong Kong stock market has fallen more than 10.5% in the past month, the overall property market climate has become a wait-and-see. A family investor who relies on government policies and has invested in more than 20 industrial buildings has publicly stated last weekend that the current market conditions are still a good time to continue investing in industrial buildings.
Although the number of applications for the activation policy issued by the Lands Department in March 2019 has not increased compared with the same period of last year, it should only reflect the time required to prepare for the application. However, some of the applications for the whole building have been approved earlier. The overall figure is from last year. 109 cases have risen to 122 this year, and the number of new approvals has been concentrated in the New Territories.
The new policy allows owners to choose to rebuild the entire industrial building that meets the relevant requirements (including district and age). With the permission of the Town Planning Board, the maximum plot ratio of 20% can be increased. This policy has produced good results. The newspaper reported that it has submitted 9 applications to the Town Planning Board since the policy was announced. The total area involved 2.3 million square meters, of which two applications have been conditionally approved.
As far as market activities are concerned, areas such as Kwun Tong and Kowloon Bay are generally highly restricted. Some owners who have obtained special exemptions for the whole building of the whole building are also inclined to relax the plot ratio for redevelopment. This aspect reflects the financial benefits of some of the conversion projects; on the other hand, it also reflects the strong demand for new commercial floors.
Although the owners of industrial buildings are negotiating with the Government to replenish land premiums for changing the use and additional floor space, the price cycle of the property market also provides opportunities for owners and developers to choose the time of market entry. It is worth noting that in areas where there is no urban planning plot ratio limit, such as Wong Chuk Hang District, this policy is useless.
At the valuation level, this policy should be the most beneficial to the application for redevelopment. The land lease does not have a highly restricted industrial and/or warehouse use land. When such land is increased by the urban planning permit according to the policy, the value of its reconstruction as an industrial use should reflect this increased ratio.
However, there is an unconfirmed claim in the market that the Lands Department will only calculate the original land price based on the plot ratio of the industrial use approved in the original Outline Zoning Plan. The relevant pricing criteria will naturally have a significant impact on the pace of future industrial building redevelopment, including the self-redevelopment of the owners and the redevelopment of commercial buildings by the developers through the purchase of whole industrial buildings or mergers and acquisitions. In this regard, it is worthwhile for the Government to consider it as soon as possible and make an explanation.
As regards the conversion of industrial buildings to provide transitional housing, taking into account the fact that the converted building users are those who need such housing, including public housing waiters and grassroots, with the ability to pay rent, indicating that this measure is not a The opportunity to make a profit.
As for the earlier expectations that this measure can increase the supply of housing, it is obviously not possible to rely on interest-driven market participants. The document submitted to the Legislative Council by the end of last year has pointed out that this measure is to assist non-government organizations in making such non-profit projects.