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.