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LCQ4: Impact of industrial building revitalisation measures on cultural, creative and arts workers

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

Question:

Since April 2010, the Development Bureau has implemented a series of measures to revitalise industrial buildings (revitalisation measures).  The revitalisation measures are originally intended to encourage owners to revitalise old industrial buildings by way of redevelopment and wholesale conversion, so that more floor spaces can be provided to meet the changing social and economic needs of Hong Kong.  Nevertheless, according to quite a number of press reports, the revitalisation measures have caused the rentals of industrial building units to rise incessantly, thus compressing the room for survival of the original tenants of industrial building units.  For example, a large number of cultural, creative and arts workers have been forced to move out as they cannot afford the escalating rentals, which in turn has smothered the opportunities for the thriving development of local cultural and creative industries.  In this connection, will the Government inform this Council:

(1) whether the authorities have compiled, since the implementation of the revitalisation measures, tracking statistics on the situation of tenants of industrial building units; if they have, regarding industrial building units in various districts in each of the past six years, of the average per-square-metre rentals and their year-on-year percentage changes, the vacancy rates of industrial building units, as well as the numbers of tenants who carried out cultural, creative and arts activities and their year-on-year percentage changes;

(2) whether the authorities will expeditiously conduct a comprehensive review upon closure of applications in respect of the revitalisation measures at the end of March this year, including the impact of such measures on the room for survival of cultural, creative and arts workers, as well as the effectiveness in and the adverse impact on promoting the re-use of local industrial buildings; and

(3) given that the 2014 Area Assessment of Industrial Land in the Territory published by the Planning Department last year has proposed that the restrictions on non-industrial uses in industrial buildings be further relaxed, whether the authorities have plans to introduce compensation policies to encourage owners to lease existing industrial building units to cultural, creative and arts workers at affordable rental levels; if they do, of the details and the implementation timetable?

Reply:

President,

The Government announced in October 2009 a series of revitalisation measures to facilitate redevelopment or wholesale conversion of old industrial buildings with a view to providing more floor space to meet Hong Kong's changing social and economic needs.  The objective of the revitalisation measures is to better utilise the precious land resources of Hong Kong through encouraging the redevelopment and wholesale conversion of existing industrial buildings.  These measures have been implemented since April 1, 2010 on a time-limited basis.  Refinements have since then been made to the measures and the deadline extended.  The final deadline for submitting applications is March 31, 2016.  The measures take into account the needs of the economic development of Hong Kong as a whole, and whether to undergo conversion or redevelopment is a matter for the owners and users of industrial buildings and the market forces.  The measures do not target at or tilt towards any particular sector.

Having consulted the Home Affairs Bureau (HAB) and the Commerce and Economic Development Bureau (CEDB), my reply to the three-part question is as follows:

(1) According to the information provided by the Rating and Valuation Department, the overall vacancy rate of private flatted factories in Hong Kong dropped from about 6.7 per cent to about 5 per cent (note 1) over the past six years from 2010 to 2015.  Changes in the average rents and prices for private flatted factories on Hong Kong Island, in Kowloon and in the New Territories are listed at Annex.  As mentioned above, the revitalisation measures are devised to cater for the needs of the economic development as a whole, and do not target at or tilt towards any particular sector.  Utilisation of industrial buildings depends on the aspirations of the owners and users as well as market forces.  Hence, we have not conducted any tracking survey on the tenants of industrial buildings, nor collate statistical information about the use of industrial buildings by cultural and creative industries.

(2) and (3) As at end of February 2016, the Lands Department (LandsD) has received a total of 215 applications under the revitalisation measures, of which 124 applications had been approved, providing a total of about 1.38 million square metres of floor area (note 2).  Among these 124 approved cases, 28 applications (note 3) are for the wholesale conversion of older industrial buildings and have proposed new uses including "Place of Recreation, Sports or Culture" which can provide floor area for cultural and creative industries.  Another 16 approved applications (note 4) are for redevelopment into "non-industrial" or "non-residential" uses, of which the relevant user clause can allow uses of cultural and creative industries in different operation modes such as place of recreation, sports and culture, or related workshop, training venue and educational institution, etc.  Whether these projects will eventually provide for uses by the cultural and creative industries as permitted under the relevant land documents will depend on the development plan of the property owners.

The Area Assessments of Industrial Land in the Territory conducted by the Planning Department (PlanD) in 2014 facilitates our understanding of the latest usage of the existing privately-owned industrial buildings.  The study is also helpful to achieving more effective planning and optimal use of industrial land resources through examination of the usage of and overall demand for existing industrial land, and whether certain individual sites are suitable for converting into other uses.  The study was completed in August last year and its findings show that the vacancy rates of industrial buildings in "Industrial" ("I") and "Other Specified Uses" annotated "Business" ("OU(B)") zones as compared with the figures in 2009 have decreased from 6.5 per cent to 3.5 per cent and from 8.4 per cent to 6.0 per cent respectively, while about half of the floor space was constantly used for industrial purposes.  The usage patterns above indicate not only a continued market demand for industrial floor space, but also the fact that the policy of revitalising industrial buildings through time-limited measures to optimise the use of old industrial buildings during the economic restructuring period has achieved the expected results.  Therefore, the measures concerned will cease to be in force by the end of March this year as scheduled.

The above findings of the study also show that the percentages of gross floor area for "Other Uses" (including cultural, creative and arts studios) in "I" and "OU(B)" zones as compared with the figures in 2009 have increased from 2.4 per cent to 3.8 per cent and from 3.5 per cent to 6.2 per cent respectively.  This indicates that there is a certain level of demand for floor space for "Other Uses" in existing industrial buildings.  Therefore, we recommend further relaxation of the restrictions on non-industrial uses, especially those uses that will not affect building and fire safety or cause nuisances to other users in the same building, with a view to further optimising the use of existing industrial buildings.  In this connection, the outline zoning plans (OZPs) of Sha Tin, Ma Tau Kok, Tsing Yi, Aberdeen and Ap Lei Chau, Fanling/Sheung Shui and Kennedy Town and Mount Davis have been amended since 2015 to include "Art Studio (excluding those involving direct provision of services or goods)" as an always permitted use in industrial-office buildings in "I", "OU(B)" and "Residential (Group E)" zones.  PlanD will make similar amendments to other OZPs in future if suitable opportunities arise.

Apart from the measures for revitalising industrial buildings, the Town Planning Board has expanded the scope of uses always permitted in the "I" zone since 2001 to allow for more flexibility in the use of industrial-office buildings, permitting uses relating to creativity and music to be carried out in such buildings such as audio-visual recording studios and design and media production offices.  That said, in view of fire safety considerations, such uses should not involve any direct provision of customer services or goods. 

If a certain use, which is permitted in industrial buildings under the planning system, is not in compliance with the lease conditions of the industrial lot concerned, the owner of the premises can apply to LandsD for lease modification or short term waiver to avoid breaching the lease conditions.  If the application is approved, the owner will be required to pay land premium or waiver fee for the approval. 

In addition to the above measures under the planning and land administration regimes, the Hong Kong Arts Development Council (HKADC) has, with the support of HAB, provided art space for rent by artists at concessionary rates in an industrial building in Wong Chuk Hang.  Such space was put into use in the fourth quarter of 2014 and has been fully let out.  HKADC is also working with the Tai Po District Council to retrofit a vacant school premise into an arts centre to provide space for performing artists and arts groups.  In addition, the Government has reserved spaces in the future development of a land sale site at Aberdeen for providing arts space to support the development of arts in Hong Kong.  In parallel, the Government also encourages the development of cultural facilities in support of artistic endeavours by community organisations.  For example, the Jockey Club Creative Arts Centre in Shek Kip Mei, which has over 100 studios, operates on a non-profit making mode to provide space for artists.  Besides, with the support of the relevant policy bureaux, we will continue to identify suitable sites to provide space for arts, cultural and creative industries.  For example, the former Police Married Quarters on Hollywood Road has been revitalised into a creative industries landmark called "PMQ", which provides about 130 numbers of design studios, resources centre, multi-function area for creative activities, and an exhibition hall "i-Cube", etc. to promote creative industries.  In partnership with the Hong Kong Jockey Club, the Government is also taking forward the Central Police Station Compound revitalisation project, which will provide a centre of heritage, contemporary art and leisure for the public to enjoy.  Separately, the Energizing Kowloon East Office also endeavours to explore suitable opportunities in Kowloon East to provide space for uses of the arts, cultural and creative industries.  We are also examining the feasibility of providing space in the development of the two action areas in Kowloon Bay and Kwun Tong for such uses.  The planning studies of the two action areas are expected to be completed in 2016 and 2017 respectively.  Moreover, according to CEDB, it will continue to provide financial support to projects conducive to the development of creative industries, such as market promotion and talent development projects, through the CreateSmart Initiative, the Film Development Fund and other funding sources.  The relevant policy bureaux will continue to explore various measures for promoting cultural, creative and arts development.

Note 1: Provisional figure.

Note 2: Excluding the 34 applications that have either been withdrawn by the applicants after approval or terminated after execution.

Note 3: Among the approved cases, 6 applications had subsequently been withdrawn after approval, 18 applications had the special waivers executed and the remaining 4 applications are pending execution of the special waivers.

Note 4: Six applications had subsequently been withdrawn after approval.

Ends/Wednesday, March 16, 2016
Issued at HKT 16:54

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