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LCQ1: Measures to increase commercial floor space

Following is a question by the Hon Chan Kam-lam and a reply by the Secretary for Development, Mr Paul Chan, in the Legislative Council today (March 16):

Question:

Some surveyor firms have pointed out that the vacancy rates of Grade A commercial buildings have all along been extremely low in recent years. With the economy of the United States improving gradually, quite a number of multinational companies and mainland-funded organisations have set up offices in Hong Kong one after another, aggravating the problem of shortage of commercial floor space in Hong Kong. It is estimated that there will be a shortfall of two million square feet of commercial floor space in 2020. On the other hand, the Chief Executive stated in his Policy Address delivered in January that the Government would gradually rezone suitable "Government, Institution or Community" (G/IC) sites in core business districts for commercial use, and would continue to promote the conversion of Kowloon East into the second core business district, including the progressive implementation of the reprovisioning of the existing government facilities in the "Kowloon Bay Action Area" and the commencement of a study on the "Kwun Tong Action Area", in order to release more land for commercial use. However, there are views that the various aforesaid measures can hardly solve the imminent problem of shortage of commercial floor space as the implementation of them will take as long as five to eight years. In this connection, will the Government inform this Council:

(1) whether the authorities have regularly conducted studies on the supply of and demand for commercial floor space across the territory; if they have, of the latest study outcome; if not, the reasons for that; the details of the supply of commercial floor space in various districts across the territory in the past two years; the details of the supply of commercial floor space and the relevant supply indicators in various districts across the territory in each of the next five years;

(2) of the G/IC sites whose rezoning for commercial use has already been taken forward by the authorities, the total area of the commercial floor space that can be provided by those sites, the progress of amending the relevant statutory plans, and the anticipated time when the sites concerned can be put up for sale; the G/IC sites whose rezoning for commercial use is under study by the authorities, the progress of the relevant study, the total area of the commercial floor space that can be provided by those sites, and the anticipated time when the sites concerned can be put up for sale; and

(3) given that the authorities indicated as early as in the 2008-2009 Budget the plan to relocate the three government office buildings situated in Wan Chai in order to release the sites concerned for developing Grade A commercial buildings, and yet it has been nearly eight years since the announcement of the plan, of the specific progress of the plan?

Reply:

President,

To maintain Hong Kong's position as an international financial and commercial centre, the Government endeavours to provide commercial land and floor space to meet the needs of different economic activities and support the sustainable growth of Hong Kong's economy. The Government adopts a multi-pronged approach to ensure that land supply in the short, medium and long term not only satisfies the needs of housing, infrastructure and supporting community facilities, but also caters for economic developments.

As regards commercial sites and floor space, the Government will continue to take forward various measures for increasing supply, including, as the Hon Chan Kam-lam has just mentioned, converting suitable government properties and "Government, Institution or Community" (G/IC) sites in core business districts (CBDs) to commercial use; promoting the transformation of Kowloon East into the second CBD including land use rezoning and introducing revitalisation measures to promote wholesale conversion and redevelopment of industrial buildings for optimising the use of their floor space, and providing government land in a number of Action Areas for commercial developments; as well as reserving sites in the planning process of various medium and long-term land development projects for providing more space for commercial and other economic activities (for details please see Annex 1).

After consulting the Financial Services and the Treasury Bureau (FSTB), Rating and Valuation Department (RVD) and Government Property Agency (GPA), my reply to the three-part question is as follows:

(1) RVD compiles on a regular basis statistics on private offices, Grade A offices in core districts and retail premises, including figures on stock, completions, rental and price indices. The relevant information in the past five years is at Annex 2. The short-term demand and supply for commercial floor space is subject to various factors such as economic situation. The majority of market supply in the past five years comes from commercial floor space in private development projects, including those from redevelopment or conversion projects on private land.  The Government does not have a specific supply target for new commercial sites, but will continue its efforts in increasing the supply of government land available for sale for commercial use.

From 2010-11 to 2015-16, the Government has been proactive in providing commercial and business sites to the market. A total of 21 commercial or business sites have been or will be sold, capable of providing approximately a total of 816 000 square metres of commercial floor area upon completion. Yau Tsim Mong District, Sham Shui Po District, Kowloon City District, Sai Kung District and Islands District each contribute one site; two sites each in Yuen Long District and Kwai Tsing District; five sites in Sha Tin District; and seven sites in Kwun Tong District. Moreover, eight commercial and business sites have been included in the 2016-17 Land Sale Programme, one each in the Central and Western District, Southern District and Kwai Tsing District; two in Kowloon City District; and three in Sham Shui Po District. It is estimated that these eight sites can provide a total of approximately 536 000 square metres of commercial floor area.

As for the trend of long-term demand and supply, the Planning Department (PlanD) will formulate a long-term planning strategy for the market-driven economic land uses when studying the territorial development strategy. Currently, PlanD is carrying out an updating study on the territorial development strategy, known as "Hong Kong 2030+: Towards a Planning Vision and Strategy Transcending 2030" (Hong Kong 2030+). A consultancy has been engaged under the framework of that study for updating the demand forecast of various economic land uses (including Grade A offices and business).  The forecast is expected to be completed later this year and will serve as one of the essential components of "Hong Kong 2030+".

(2) and (3) As mentioned above, the Government has been proactive in converting suitable government properties and G/IC sites for commercial use to increase the supply of commercial floor space. In this connection, the Government has successfully disposed of its properties at the Trade and Industry Department Tower in Mong Kok, releasing around 26 400 square metres of commercial floor area. The Government has also included in the 2016-17 Land Sale Programme the Murray Road Multi-storey Carpark in Central, Tai Lin Pai Road Cooked Food Hawker Bazaar, Yu Chau West Street Cooked Food Hawker Bazaar, and the site at the junction of Lai Chi Kok Road and Cheung Shun Street in Cheung Sha Wan, which altogether are capable of providing an estimated commercial floor area of around 138 500 square metres.  The site of Tai Lin Pai Road Cooked Food Hawker Bazaar is planned for sale in the second quarter of this year, while the statutory planning procedures for the other sites have also commenced and are expected to be completed within 2016-17. In addition, the Government plans to redevelop the Queensway Plaza site, which can provide an estimated commercial floor area of around 93 300 square metres, and the statutory planning procedures have also commenced.  We are also planning to convert other suitable sites for commercial use, for example the former Mong Kok Market site, the former headquarters of the Electrical and Mechanical Services Department and the surrounding sites on Caroline Hill Road, and the government sites at Sai Yee Street, which will jointly provide at least 300 000 square metres of commercial floor area. Subject to the progress of various infrastructure works at the new Central harbourfront, the Government will make reference to the recommendations of the Urban Design Study for the New Central Harbourfront and offer sites suitable for commercial development in a timely manner.  It is estimated that about 200 000 square metres of commercial floor area can be provided in total.

Under the Energizing Kowloon East initiative, Kowloon East, as a new business district, has huge potential to supply about 5 million square metres additional commercial floor area. Since 2012-13, the Government has sold five commercial sites in Kowloon East, which can provide a total of approximately 270 000 square metres of commercial floor area upon completion. In addition, we are studying the relocation of existing government facilities in the two Action Areas of Kowloon East to make available vacant sites for comprehensive developments of commercial and other uses.  It is expected that the released sites will be able to provide about 560 000 square metres of commercial floor area. The Kai Tak Development is also one of the important sources of future commercial land supply in Hong Kong with a total of 19 sites zoned "Commercial", "Comprehensive Development Area" and "Other Specified Uses". These sites, measuring jointly about 21 hectares, are reserved for commercial uses including office, shop and hotel. Depending on the progress of the planned infrastructure works, these sites can be released to the market in phases from 2016 onwards, and are estimated to provide a total of about 1 million square metres of commercial floor area.

According to FSTB, the relocation of the three government office buildings at the Wan Chai waterfront is a large-scale project involving 29 departments, 175 000 square metres of floor area and more than 10 000 staff. The project will be implemented in phases as the planning and preparation work takes time. The first replacement building project, namely the West Kowloon Government Offices, commenced construction in mid-2015 and is expected to be completed in 2019. About one-fifth of its floor space will be used for reprovisioning some of the government offices in the three government office buildings at the Wan Chai waterfront.  Another two projects, namely the Government Data Centre Complex and the Treasury Building in Cheung Sha Wan, have secured funding approval by the Finance Committee of the Legislative Council (LegCo) for consultancy services for the pre-construction works.  Relevant bureaux and departments are now also actively pursuing other new replacement government office building projects in districts including Kai Tak, Tseung Kwan O and Chai Wan. Subject to the progress of the planning work, FSTB will be submitting funding applications for these projects to LegCo in due course. With the successive completion of these new government office buildings from 2019 onwards, GPA will arrange for the departments concerned to vacate the three government office buildings at the Wan Chai waterfront in phases, and lease out the floor space vacated with a view to increasing the supply of Grade A office space in Wan Chai.

Ends/Wednesday, March 16, 2016
Issued at HKT 17:00

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