LCQ2: Retail floor area supply

Following is a question by the Hon Vincent Fang, and a reply by the Secretary for Development, Mr Paul Chan, in the Legislative Council today (July 3):

It is learnt that the number of mainland visitors to Hong Kong under the Individual Visit Scheme has been on the rise over the past decade, and the places where they go shopping concentrate in shopping malls, shops and traditional shopping areas along the railway lines.  According to the statistics of the Census and Statistics Department, the gross proceeds of the retail industry had grown by 1.3 times between 2002 and 2011 but the retail floor area had increased only by 30% during the same period.  As the demand far exceeds the supply, rents of shops in traditional tourist shopping areas have surged continuously and caused the rise in commodity prices, thereby giving rise to discontent among members of the public towards mainland visitors.  On the other hand, the Chief Executive said when he took office that he would take measures to increase retail floor area and ancillary facilities.  However, relevant measures have not yet been taken so far, and as a result, the development of the retail industry still faces serious constraints.  In this connection, will the Government inform this Council:

(a)  given that although the Secretary for Development told this Council on February 6 this year that more retail floor area would be provided in Kowloon East, Kai Tak Development area, as well as in the new development areas in the North East New Territories and Hung Shui Kiu under planning, he did not reveal the number of large shopping malls to be developed in such development areas, nor the estimated retail floor area to be provided and the completion time, whether the Government has plans to increase retail floor area and ancillary facilities in the short term, build large shopping malls at places near the boundary or along the railway lines, and increase the retail floor area in traditional shopping areas (e.g. by building an underground shopping centre in Causeway Bay, etc.) so as to meet the pressing demand for shopping facilities arising from the increase in the number of visitors at present, and to ease the conflicts between local consumers and mainland visitors; if it has, of the details; if not, the reasons for that;

(b)  whether, in the medium to long term, the Government has any plan to increase the proportion of retail floor area for the sites scheduled for sale; of the estimated retail floor area to be provided by the sites to be put up for auction by the Government in this financial year, and the percentage of retail floor area in the total floor area to be provided by those sites; and

(c)  if it knows, the proportion of retail floor area to residential floor area in the development projects under the Urban Renewal Authority ("URA") which are in progress or will soon be launched, whether URA will consider increasing the retail floor area in those projects to meet market demand given that those development projects are all located in densely populated districts, and whether URA will consider leasing the former Central Market on short-term tenancies for retail purpose before the commencement of the revitalisation project for the Market; if URA will, of the details; if not, the reasons for that?



Retail is one the major economic activities of Hong Kong.  Since the number of mainland visitors to Hong Kong has been on the rise in recent years, the retail market remains vibrant, and the market demand for commercial floor space, especially retail floor space, has also increased.  The HKSAR Government noted the situation and has been progressively providing suitable land, and ensuring flexibility in land planning and land use, so that the market can respond effectively to the ever-changing needs of the retail industry as well as other commercial activities.

My reply to the question raised by the Honourable Vincent Fang is as follows:

(a) & (b)  As set out in the 2013 Policy Address, the Government will continue to adopt a multi-pronged approach to increase the supply of housing land, while at the same time supplying more commercial land and facilities to facilitate the further development of different economic activities including the retail industry.  Examples include the development of Kowloon East, which has the potential to provide an additional commercial floor space of about 4 million square metres, into another core business district of Hong Kong; the Kai Tak Development Area, which has 14 sites with a total area of about 14 hectares zoned "Commercial"; the New Central Harbourfront, which is expected to make available more than 260 000 squares metres of commercial floor space.  Over the past two years, the Government has sold a total of nine commercial/business sites, providing about 400 000 square metres of gross floor area (GFA).  The 2013-14 Land Sale Programme also offers nine commercial/business sites which are capable of providing about 330 000 square metres of GFA.  As the details of these measures were provided during the discussion of the motion on "Increasing the business floor areas of the retail industry" at a Legislative Council meeting on February 6, and also in the written reply to the Hon James Tien Pei-chun's question on "Demand and supply of commercial sites" today, I shall not repeat here.

The various economic activities in society, including retail, require commercial land and floor space.  The Government's role is to increase the supply of appropriate sites, space and hardware.  It would be for the market and the operators to decide how to develop such sites and what types of commercial uses should take up the floor space.  Operators, be they small and medium enterprises or big businesses, are most knowledgeable about the market conditions and are best placed to respond to the situation and the changing needs flexibly and timely.  The Government's role is to maintain a fair and open business environment, and continuously provide land and supporting hardware, so as to enable various commercial activities (including retail) to develop sustainably.

There is sufficient flexibility under the current land planning and land use to allow the market to respond to the changing demand for land and facilities for various commercial (including retail) purposes.  For example, apart from offices, "retail shops" is an always permitted use on the land zoned "Commercial" in the Central Business District and major shopping areas.  In the "Residential (Group A)" zones, retail commercial use in the lower three storeys of the concerned buildings is also always permitted.  Furthermore, "mixed uses" zones have in recent years been introduced into the Kai Tak Development Area and the West Kowloon Cultural District, etc., so as to enhance the flexibility of non-residential uses in the buildings there.  Developers can also continue to propose suitable change of land use for retail business developments or other commercial activities via planning applications.  The demand for floor space from various commercial activities (including retail) changes at all times, and operators' modes of business are also quite dynamic.  As such, while the Government continues to increase the supply of commercial floor space, the Government in general will not mandate floor space for a specified commercial use, or require a particular proportion of commercial floor space for retail use.

(c)  The residential and commercial floor areas of the redevelopment projects of the Urban Renewal Authority (URA) are subject to the provisions of the respective Outline Zoning Plans, the Buildings Ordinance and the land leases concerned.  In general, the maximum plot ratio for commercial use is 1.5 times of the net site area.  As the development projects have to comply with the requirements of various fire safety regulations, other relevant ordinances and the sustainable building design guidelines, the actual commercial floor area made available upon completion may be less than the maximum floor area permitted.  To ensure the optimal use of urban land, URA will provide the most appropriate retail floor area in its urban renewal projects in accordance with the proposed uses of the development and subject to the town planning requirements and other relevant stipulations.

In May this year, URA submitted a planning application on the Central Market revitalisation project to the Town Planning Board (TPB).  Subject to the approval of TPB, the project will provide space for commercial, cultural and/or community uses.  The revitalised Central Market building will be able to provide about 22 000 square metres of GFA, of which, after deducting the floor area required for the necessary fire service and electrical and mechanical installations, about half will be used for amenity and greening facilities, and the rest will be for retail purposes.

At present, the Central Market building is a government property.  Part of the area along the second floor passageway of the building has been rented to URA by way of short term tenancy for operation as the "Oasis Gallery".  As regards the remaining portion of the area along the passageway, it is currently leased out to eight commercial tenants for temporary operation on a monthly basis.  Before officially handing over the market building to URA, the Lands Department will give timely notifications to the tenants to move out in accordance with the terms of the tenancy agreements.  In view of the dilapidated state of the other parts of the market building, it is considered not suitable for renting out for other uses.

Ends/Wednesday, July 3, 2013
Issued at HKT 17:27