'Bonus plot ratio scheme a core step in urban renewal'

Property experts have welcomed the Hong Kong government's introduction of the Bonus Plot Ratio Pilot Scheme, viewing it as a crucial step towards urban renewal in the city. The scheme aims to encourage private redevelopment efforts and motivate developers to modernize the rapidly aging residential structures found throughout Hong Kong.

Under the new initiative, developers working on the redevelopment of aging residential buildings in seven designated districts - among the city's oldest neighborhoods - can receive a 20 percent additional gross floor area bonus, without any premium fees, to boost the financial feasibility of these projects. The buildings must be at least 50 years old, and the redevelopment site must be at least 700 square meters in size.

Hannah Jeong, executive director and head of valuation and advisory services at CBRE Hong Kong, speaking to RTHK, expressed her positive outlook on the initiative, stating that the 20 percent bonus ratio is quite appealing. She explained that while the developers receive compensation for their costs, it remains to be seen how many redevelopment sites will be eligible.

Jeong also noted that the scheme will not have immediate impact, but it will stimulate developers to proactively explore redevelopment opportunities in the market and consolidate them for further development phases.

Lau Chun-kong, managing director at Colliers International, expressed a similar sentiment, calling the move an important initiative to enhance the redevelopment potential of certain old buildings. He added that developers or landowners who have previously assembled some sites but have not yet completed the projects may benefit from the new initiative, as they will have higher land values to support or subsidize the acquisition of old units.

The seven old districts targeted by the scheme include Cheung Sha Wan, Ma Tau Kok, Mong Kok, Sai Ying Pun, Sheung Wan, Tsuen Wan, Wan Chai, and Yau Ma Tei.

Developers who commit to redeveloping qualified old residential buildings into new homes will receive the 20 percent bonus in floor space, free of charge. Additionally, the bonus can be converted into a land premium credit that can be utilized in other land deals within Hong Kong or across the Special Administrative Region. The Bonus Plot Ratio Pilot Scheme is set to commence on September 1 and will run for a period of five years.