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Peel Street/Graham Street project overview

Peel Street/Graham Street project begins property acquisition

The Urban Renewal Authority (URA) today (Wednesday) issued offer letters to owners of 361 property interests in 37 old buildings affected by the Peel Street/Graham Street project in Central & Western District.

Measuring a total site area of about 57,240 square feet, the project is bounded by Peel Street, Graham Street, Gage Street, Wellington Street, Cochrane Street, Gutzlaff Street, Staveley Street and Kin Sau Lane in the Central and Western district. Buildings in the redevelopment area were constructed predominantly in the mid 1950s and early 60s, except for four pre-war buildings which the URA intend to preserve for adaptive re-use.
The total development cost of this project is estimated at $3.8 billion, of which acquisition and rehousing cost is about $1.8 billion.   The development will help improve the living conditions of some 320 households involving approximately 820 people who have repeatedly urged for early implementation of the project over the past years.
In addition to bringing tangible benefits to those directly affected, the URA intends to regenerate the area with the creation of an "Old Shop Street" as well as the provision of a multi-purpose community hall of 13,500 square feet and some 17,000 square feet of quality open space for the enjoyment of the community. It remains the objective of the URA of maintaining and strengthening the street market abutting the development site.
Those owners of domestic properties who qualify as owner-occupiers will be offered $8,508 per square foot of saleable floor area. The acquisition offers are based on the Government's Home Purchase Allowance (HPA) policy. HPA is the difference between the market value of a notional seven-year-old flat in a comparable quality building in a similar locality (commonly known as "seven-year rule") and that of the acquired property. In addition to the market value of the acquired properties, owner-occupiers will receive the full HPA amount whereas owners of tenanted and vacant domestic properties will receive a supplementary allowance up to half of the HPA.

A spokesman for the URA said: "As in previous projects, the URA has appointed seven independent valuation firms for the valuation of the unit rate of the notional seven-year-old flat.  The lowest and highest valuations are eliminated before averaging the remaining five as the final unit rate for the offers. This broad-based and objective method of valuation has proved to be well accepted by most owners in previous projects."

The seven valuation firms were appointed through a fixed-price balloting mechanism. To ensure its fairness, impartiality and high transparency, President of the Hong Kong Institute of Surveyors, Mr Raymond Chan, Chairman of the Central and Western District Council, Mr Chan Tak-chor, District Councillors Mr Yuen Pun-keung and Cheng Lai-king, as well as representatives of local residents have been invited to take part in the balloting process.

"The value of a seven-year-old notional flat is used solely for the basis for calculating the cash compensation offers. It does not necessarily imply that a ready current supply of seven-year-old flats of similar sizes is available for purchase in the locality.  Owners have the sole discretion to decide how to use the cash compensation which they receive according to their personal needs and preferences," he explained.

"Based on feedback from owner-occupiers affected by previous projects, the current compensation framework provides ample flexibility to enable them to exercise their choices in accordance with their personal circumstances. Whilst some owner-occupiers might choose to locate themselves within the same areas, others might wish to live elsewhere in Hong Kong, possibly to be nearer their close relatives, or for other reasons. Some might even choose to retire and live in the mainland."

"Judging by URA's experience in previous projects, some owner-occupiers of domestic units may prefer to find replacement flats within the same locality so as to maintain their lifestyles and social networks.  The URA will, as for other projects, provide them with as much assistance as it can to help them to find accommodation in the same locality suitable for them and may, if appropriate and necessary, consider introducing new measures to offer them other choices," the spokesman added.

For a building in single ownership, it is valued either on its existing use value plus relevant allowances for shops and domestic units in the building or on its redevelopment value plus an ex-gratia allowance of 5%, whichever is higher.

Affected owners will have ample time to consider the URA's offers and to accept them within the next 60 days.  In addition to the acquisition offers, owners will receive an incidental cost allowance (ICA), where applicable, as an incentive for them to accept the offers within the 60-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 current ICA for owner-occupied domestic property is $106,400 or $98 per square foot ($1,050 per square metre) of saleable floor area, whichever is higher. For domestic property that is tenanted or vacant, the ICA is $83,600.

For non-domestic properties, the acquisition offers will include an ex-gratia allowance on top of the market value.  The allowance for tenanted or vacant non-domestic property is 10 per cent of its market value or one time the government rateable value, whichever is higher.  The allowance for owner-occupied non-domestic property is 35 per cent of its market value or four times its rateable value, whichever is higher.

Upon completion of the property acquisition, the URA will make compensation or rehousing arrangements for the tenants concerned, if eligible.

The Authority has commissioned an urban renewal social service team staffed by professional social workers of the St James' Settlement to provide counseling service and practical assistance to residents who may encounter personal or family problems. Affected residents may call them on 2857 1606 for assistance. Interested parties may also contact the URA's Neighbourhood Centre at Ground Floor 27A Gage Street in Central, or call the URA hotline at 2588 2333 for any enquiry they may have.

The URA and the social service team will hold briefing sessions to the owners and tenants respectively on the arrangement for acquisition, compensation and rehousing.