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Property acquisition for Kwun Tong Town Centre project to start soon

The Urban Renewal Authority (URA) will issue purchase offers to owners of all 1,657 legal property interests of the Kwun Tong Town Centre project (Project K7) before the end of this month to acquire their property interests.  The Land, Rehousing and Compensation Committee of the URA Board today (Tuesday) endorsed a unit rate of $5,937 per square foot of saleable floor area for a notional 7-year-old flat in respect of the project.

Speaking to the media representatives this afternoon, the Chairman of the URA, Mr Barry Cheung, said: "The unit rate is assessed in accordance with the established mechanism of the URA which is open, fair and transparent.  Because of the large number of property interests involved and taking into account the views of the affected residents and the community, the URA has enhanced the valuation mechanism by appointing 11 independent valuation firms instead of the usual practice of commissioning seven to perform assessment of the unit rate of a notional 7-year-old flat for Project K7."

The URA requested some 70 surveying firms registered with the Hong Kong Institute of Surveyors (HKIS) to express interest in taking part in the assessment of the unit rate of the notional 7-year-old flat.  In July this year, the URA held an open ballot to select the 11 surveying firms, in which members of the Kwun Tong District Council, representatives of owners and the HKIS invited by URA had attended to the ballot.  The process was open, objective and fair.  These 11 surveying firms comprising local and international companies, with over 40 experienced practising surveyors, worked in conjunction with their own specialised research teams on the valuation assessments.  At the same time, three qualified surveying firms, instead of the usual practice of commissioning two, have been appointed to assess the market value of each domestic property interest, and also three more qualified surveying firms to assess the market value of each non-domestic interest of the project.

The purchase offer for domestic properties is based on the Home Purchase Allowance (HPA) policy approved by the Finance Committee of the Legislative Council in 2001 in which it is the difference between the market value of the acquired property and that of a notional seven-year-old flat of similar size in a similar locality.  The notional flat is situated at the middle floor of a notional building with average orientation, i.e. not facing south or west, and without sea view.

In addition to the market value of the acquired properties, eligible owner-occupiers will receive the full HPA amount whereas owners of tenanted and vacant domestic properties will receive a supplementary allowance (SA) up to half of the HPA.

Mr Barry Cheung emphasised that the unit rate assessed by the appointed surveying firms is fair and reasonable. Although there is an absence of comparable buildings of a notional seven-year-old flat in Kwun Tong, valuation has been made with reference to transactions of comparable buildings in comparable districts with characteristics and transport network similar to Kwun Tong.  Hence, the comparable buildings selected are not confined to those in Kwun Tong.

The districts chosen included Kwun Tong/Lam Tin, Choi Hung, Diamond Hill, Wong Tai Sin, San Po Kong, Hung Hom, Mongkok and Yaumatei A total of 22 comparable developments/buildings were selected, for which the 11 valuers conducted a total of 389 comparable analyses.

"Based on these comparables, appropriate adjustments are made to factors such as the valuation date (1 December 2008), building age, floor, orientation, quality, size, accessibility and environment so as to arrive at the unit rate of a notional 7-year old  flat", Mr Cheung added.  The 11 surveying firms have given a detailed account of the selected districts and comparable transactions for the assessment in their valuation reports, in both English and Chinese.  Copies of the reports and their company profile will be disclosed and placed in the Resource Centre at Kwun Tong by the end of this month for owners' information.

On the availability of flats, Mr Cheung said the URA's  property consultant's preliminary study  estimated that there are about 2,500 flats intended to sell in the second-hand property market of the districts in the vicinity of Kwun Tong, as well as in the districts where comparable buildings are selected by the 11 surveying firms for assessment.  Out of the 2,500 flats, there are about 750 flats with asking prices in the region of $2.5M.

Owners will have ample time to consider the URA's offer and to accept the offer within 90 days after receiving it, unlike the normal practice of a 60-day acceptance period.  Eligible owner-occupiers of domestic properties will receive an Incidental Cost Allowance (ICA), where applicable, as an incentive for them to accept the offers within the 90-day period.  The current ICA for owner-occupied domestic property is $111,900 or $111 per square foot ($1,195 per square metre) of saleable floor area, whichever is higher. For domestic property which is tenanted or vacant, the ICA is $87,700.

Mr Cheung said, "It's entirely up to individual owners to decide how they are going to use the compensation they receive, whether to buy or to lease a flat.  At the end of the day, it will create a chain effect giving an impetus to a range of economic activities and creating at least 1,000 working opportunities.

A series of briefing sessions on the acquisition and rehousing arrangements will shortly be held for the affected owners, residents and shop operators after the issuance of purchase offers.  The Resource Centre at Hip Woo Street, Kwun Tong, will at the end of this month extend its office hours from 9 am to 9 pm, seven days a week, to provide one-stop service to residents in need.  The enquiry number of the Resource Centre is 2110 5858.

Meanwhile, the urban renewal social service team of the Christian Family Service Centre will also step up its resources to provide professional and counselling services alongside URA frontline staff for the affected residents.  Residents and owners who want to make enquiries may also call the URA hotline 2588-2333.

The following are attached for information:

  1. List of 71 surveying firms registered with the HKIS who were invited by URA to express interest in carrying out the assessment of 7-year old flat for Project K7.
  2. List of 11 surveying firms appointed for the 7-year-old flat assessment (including the lists of surveying firms appointed for the market value of individual domestic and  non-domestic  property interests).
  3. The result of the assessments of 7-year old flat by the 11 surveying firms.
  4. List of comparable districts and buildings chosen for assessment of 7-year old flat.
  5. Examples of acquiring replacement flats

Appendix 1-5 (Chinese only)

(ENDS)