URA issues acquisition offers for Lee Tung Street project
The Urban Renewal Authority (URA) today (Friday) issued offer
letters to owners of 647 property interests affected by the Lee
Tung Street redevelopment project, which is its largest so far, at
a total acquisition cost of about $1.55 billion.
Affected owner-occupiers of domestic properties will be offered
$4,079 per square foot on a saleable area basis. On average, this
is about 2.9 times the open market value of the affected domestic
properties which, as a whole, have been valued at $1,414 per square
foot. Most of the properties are over 40 years old and in a
dilapidated condition.
The URA's cash offers are based on the Government's Home Purchase
Allowance (HPA) policy that links the level of compensation to the
open market value of a notional replacement flat of seven years
old. A notional replacement flat, as defined in Government's
published guidelines, is one at the middle floor of a building with
average orientation, i.e. not facing south or west, and without sea
view, and situated in a similar locality in terms of
characteristics and accessibility.
"The 'notional' principle means that owners should not take the
cash offer as a guarantee for them to find and buy a flat in the
vicinity because this will depend entirely on market supply and
owners' personal preferences," a URA spokesman explained.
As in previous projects, the URA has appointed seven independent
valuation firms by open tender for the valuation of the HPA unit
rate. The seven valuations are fed through a weighted average
mechanism in which the lowest and highest valuations are eliminated
and the remaining five given, in ascending order, a percentage
weighting of 10, 20, 40, 20 and 10 respectively, making a total of
100.
The spokesman said that this broad-based and objective method of
valuation has proved to be well accepted by most owners in previous
projects.
Affected owners will have ample time to consider the URA's offers
and to accept them within the next 75 days.
"This is 15 days longer than the usual 60-day offer period because
we should take into account the intervening Chinese New Year
holidays," the spokesman said.
In addition to the purchase offers, owners will receive an
incidental cost allowance (ICA), where applicable, as an incentive
for them to accept the offers within the 75-day period. This
allowance serves as a subsidy for the removal and various other
expenses normally incurred in the purchase of a replacement flat.
The ICA is reviewed from time to time in accordance with the
Government's rate of ex-gratia removal allowance and the Composite
Consumer Price Index.
For the Lee Tung Street project, the ICA for owner-occupied
domestic property is $92,500 or $1,040 per square metre (about $97
per square foot) of the saleable area, whichever is higher. For
domestic property that is tenanted or vacant, the ICA is
$70,700.
For non-domestic property, the purchase offer will include an
ex-gratia allowance on top of its open market value. The allowance
for tenanted or vacant non-domestic property is 10% of its market
value or one time the government rateable value, whichever is
higher. The allowance for owner-occupied non-domestic property is
35% of its market value or four times its rateable value, whichever
is higher.
The Authority will also extend its Maintenance Cost Reimbursement
Scheme to the project to cover those registered owners who agree to
sell their properties to the URA. The scheme will apply to works
undertaken in accordance with statutory orders for maintenance and
repairs made under the Buildings Ordinance, the Fire Safety
(Commercial Premises) Ordinance and the Lifts and Escalators
(Safety) Ordinance issued after the project was first announced by
the Land Development Corporation on 2 January 1998.
According to the occupancy survey conducted in October 2003, there
are about 1,000 domestic households with about 3,000 persons and
150 shop operators in the project area. Following the issue of
purchase letters, the URA will hold some 30 briefing sessions next
week to explain to the owners the URA's acquisition arrangements
and procedures. Residents can contact URA officers at the URA
Neighbourhood Centre in Wan Chai Road or call the URA's hotline at
2588 2333 for any enquiries they may have.
The Authority has also designated an urban renewal social service
team staffed by professional social workers to provide counselling
service and practical assistance to residents who may encounter
personal or family problems during the redevelopment process.
The Lee Tung Street is the 13th and the largest URA redevelopment
project commenced in the past two years, including two undertaken
in association with the Hong Kong Housing Society. The total
development cost of the Lee Tung Street project is estimated at
about $3.58 billion, including $1.73 billion for both the costs of
property acquisition and tenant rehousing or compensation, with the
rest for construction and interest costs.
Upon completion in 2009/2010, the project will be a residential
and commercial development with about 340 square metres of public
open space and 3,170 square metres for the provision of community
facilities, including a residential care home for the elderly and a
day care centre.