Factory owner proposes 928 flats at Sha Tin site as industrial demand drops

After years of government efforts, a factory owner recently applied to transform two Siu Lek Yuen industrial buildings in Sha Tin into 928 residential flats. This shift would provide a more lucrative option for developers, as Hong Kong's industrial market faces a significant decline in demand, according to analysts. The Chiaphua Group submitted a proposal to the Town Planning Board, intending to convert the Siu Lek Yuen Properties into two 35-story residential towers, offering 928 residential units.

Midland Surveyors' Alvin TP Lam explained that industrial property values in Hong Kong are experiencing downward pressure, with occupancy rates and prices in the Siu Lek Yuen area being low, hovering around HK$3,000 per square foot. However, if these buildings were converted into residential projects, the value per square foot could rise to HK$15,000 to HK$18,000.

Lam noted that the residential market would be more attractive due to the substantial price disparity. The applicant estimated the site's combined area to be 82,500 square feet, with a gross floor area of approximately 495,200 square feet, including about 20,600 square feet of retail space. Each residential unit would measure around 511 square feet.

CHFT Advisory and Appraisal's Alex Leung expects more residential developments in Siu Lek Yuen following recent government land sales, stating that changing land use from industrial to residential will yield the best return for developers. He predicts that other nearby industrial property owners will follow suit. The Planning Department had proposed rezoning the industrial area for residential use as early as 2009, but abandoned the plan in 2015 due to the Sha Tin bus depot's continued operation.

The area later shifted towards commercial revitalization, and the Planning Department proposed rezoning the area again in late 2021. Relocating a factory is a complex process, with the decision to undertake redevelopment depending on the practicality of nearby facilities, as Lam pointed out, citing the Swire Coca-Cola plant as an example.