Dynamic Management: Thoroughly Assess Project Characteristics when Prioritising Acquisitions for Timely Adjustments to Project Progress
Given the complex and ever-changing global economic landscape, it is anticipated that developers will remain prudent in acquiring new development projects in the short term. Against this background, the Urban Renewal Authority (URA) has opted to postpone the tender schedules for certain redevelopment projects, which has inevitably affected its cash flow.
To ensure the sustainability of urban renewal, the URA has previously issued HK$12 billion in bonds and secured HK$13 billion in bank loan facilities to support the substantial costs associated with planned and ongoing acquisitions of redevelopment projects, which can reach tens or even hundreds of billions. In light of this, the URA must carefully manage both its cash flow and the pace of acquisitions to avoid potentially costly investments, as these decisions could significantly impact the returns on future projects.
To address these challenges, the URA has adopted a "dynamic" management strategy that takes into account various factors, including the scale of project acquisitions, the complexity of those acquisitions, and the intricacies of the associated works. This approach enables the URA to adjust the pace of acquisitions, prioritising simpler projects that can be swiftly cleared and receive lease documents for tendering. As a result, this strategy facilitates cash "recycling," thereby replenishing cash flow for larger project expenditures.
In addition, the URA launched a new initiative called "Development Facilitation Services" (DFS) in January 2025, which provides developers with pertinent information on redevelopment projects at an earlier stage before the tendering process begins. By enhancing communication with developers, DFS enables them to gain a comprehensive understanding of the projects, prepare their bids, and form consortia well in advance. Ultimately, this proactive approach improves the success rate of tenders and further supports the URA’s cash flow.
Prioritising Acquisitions Based on Project Characteristics
While the URA initiates the acquisition process in accordance with established mechanisms, the time taken from the announcement of redevelopment to making acquisition offers to affected owners depends on project characteristics, including:
1. Scale of Acquisitions
The scale of acquisitions is critical for prioritising the issuance of offers. The greater the number of residential and commercial properties involved, the more time-consuming and costly the process becomes. For projects included in the current Business Plan that have yet to commence the acquisition process, the number of property titles ranges from 70 to over 800. Given the constraints on cash flow and uncertainties in the future economic landscape, the URA will prioritise redevelopment projects with smaller acquisition scales to mitigate the high capital demands for acquisitions.
Furthermore, when the owner decides to accept the offer, both the owner and the URA will appoint lawyers to handle the property sale matters. Depending on the availability of law firms, projects involving a large number of property titles may need to process the sale contracts in batches and may take longer time.
2. Complexity of Acquisitions
Unlike private developers, the URA has to handle tenant compensation and relocation matters in addition to acquiring property interests from the owners. This process is time-consuming, in particular for projects that involve a large number of tenants.
The URA will only conduct eligibility reviews and arrange appropriate compensation arrangements after the owner accepts the URA’s acquisition offer. Typically, it takes over ten months from the moment an owner accepts an acquisition offer until tenant compensation and relocation are completed.
If the acquired units involve subdivided flats, the process may even take a longer time, as the URA needs to go through the eligibility and relocation procedures for each individual household. The greater the number of subdivided flats, the longer the overall process will take. Furthermore, if the project involves illegal rooftop structures, the URA needs to wait until all owners accept acquisition offers before proceeding with compensation and relocation for rooftop tenants, which further contributes to delays.
In addition to residential property owners and tenants, the URA also acquires non-residential properties and provides support to business operators in need. For example, in the Kim Shin Lane Development Project in Sham Shui Po, a private elderly care home was involved. The relocation process was particularly complex, requiring the identification of a suitable site, compliance with regulatory requirements, and consideration of the mobility challenges faced by the affected elderly residents. As a result, the relocation had to be executed in phases, with the URA ensuring that the care home was given sufficient time to complete the move before returning the property.
3. Intricacies of Works
Some redevelopment projects involve road closures, diversions, or the relocation of underground utilities, including electricity cables, fiber-optic cables, water supply lines, drainage systems, and gas pipelines. Due to the need for confidentiality regarding upcoming redevelopment projects, data collection and planning can only begin once the project is publicly announced. This necessitates consultations with and approvals from various government departments, meaning that timelines and progress will vary based on the scale and complexity of each project.
For instance, if road closures or diversions are required, the URA must engage consultants to conduct traffic impact assessments and submit proposals to the Highways Department and the Transport Department for approval. Similarly, the relocation and repositioning of public utilities require coordination with relevant departments, such as the Water Supplies Department and power companies, to develop construction plans that minimise disruption to users. If the works involved are relatively straightforward, the preparation and approval process will be expedited, enabling the URA to obtain land leases more efficiently and proceed to tender, thereby accelerating cash flow replenishment.
Currently, within the URA’s Business Plan, four approved redevelopment projects have yet to commence acquisitions. The Queen’s Road West / Kwai Heung Street Development Project (Kwai Heung Street Project) has been delayed due to ongoing legal proceedings. The To Kwa Wan Road / Ma Tau Kok Road Development Scheme involves industrial buildings, requiring the URA to establish a separate strategy for managing these acquisitions. As for the two remaining projects — the Kau Pui Lung Road / Chi Kiang Street Development Scheme (Kau Pui Lung Road Development Scheme), and the Ming Lun Street / Ma Tau Kok Road Development Scheme (Ming Lun Street Project) — the URA team must carefully assess the unique characteristics of each project and consider multiple factors thoroughly before finalising the acquisition timetable.
Ming Lun Street Project: Larger Scale, Higher Complexity
In terms of acquisition scale and complexity, the Ming Lun Street Project involves over 820 property titles, nearly double that of the Kau Pui Lung Road Project. Also, there are over 1,000 affected owners, business operators, and tenants within the Ming Lun Street Project, which is more than double that of the Kau Pui Lung Road Project. Additionally, over 35% of the units in the Ming Lun Street Project are subdivided flats, requiring the allocation of extra funds and time to verify identities and relocate over 500 tenants.
The two projects also differ markedly in scope and complexity in terms of business operations. The Ming Lun Street Project requires the relocation of over 100 ground-floor shops, the majority of which are garages. In contrast, the Kau Pui Lung Road Project primarily consists of owner-occupied residential units with no commercial properties. This distinction leads to a relatively straightforward and expedited acquisition process, along with tenant compensation and relocation for Kau Pui Lung Road Project.
Regarding intricacies of works, both projects involve the relocation of underground public utilities, such as electricity cables and water supply and drainage pipelines. However, the Ming Lun Street Project presents an additional challenge with the inclusion of a large underground culvert, making the works more complicated and time-consuming. Considering the cash flow status, the URA tends to prioritise projects with faster acquisition processes. This strategy helps secure government land lease approvals and facilitates a swift transition to the tender stage, ensuring that residents' expectations for improved living conditions are met in a timely manner.
Providing Minor Home Repair Services for Residents of Old Districts
To improve both home safety and living conditions of residents in need within old districts, the URA collaborates with local organisations to provide free home repair services to them, no matter whether they are affected by the URA projects or not. These services specifically target vulnerable groups, including elderly individuals living alone, elderly couples, and low-income families. By conducting minor repairs, such as fixing walls and water pipes, this initiative aims to improve both the safety and living conditions of the buildings involved.
Over the past two years, the services have successfully assisted in dozens of cases across the Kowloon City and To Kwa Wan districts, focusing on structural repairs and anti-rust treatments. These efforts have significantly enhanced the safety and living conditions of the affected units. The URA urges all property owners in older districts — including those awaiting acquisition proposals — to prioritise the maintenance and repair of their properties and encourages owners facing challenges in repairing common areas or their individual units to seek assistance from the URA.
Adapting to Changing Circumstances and Adjusting the Progress of Projects at Different Stages
The current economic environment and property market conditions pose challenges to the financial stability of the URA. In the coming years, the URA will need to manage five approved redevelopment projects, with total acquisition costs estimated to be around HKD 30 billion. While cash flow has been strengthened through bond issuance and syndicated loans, the URA must carefully manage its existing funds, balancing the expectations and needs of residents engaged in launched redevelopment projects and those who are anticipating future redevelopment.
Given the unpredictable global economy and fluctuating property market, the URA has to consider cautiously the potential impact on acquisition decisions and tenders. If the URA only considers the wishes of residents of the initiated projects to make decisions that involve exorbitant expenditure, it may diminish the future financial returns of these projects as market conditions evolve, potentially slowing the pace of overall redevelopment of the city. Therefore, the URA will continue to review and adjust the progress of ongoing projects to ensure financial stability, while also advancing urban renewal to meet the needs of residents in older districts.