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Acquisition offers to owners of Nga Tsin Wai Village

The URA today (Thursday) issues acquisition offer letters to the owners affected by the Nga Tsin Wai Village project. Because of the unique circumstances of this project site, which is an urban village with some indigenous villagers, the URA has introduced a special compensation package, in addition to the two standard ones, based on the practices adopted by the Government for the resumption of urban area village.

Standard Compensation Package

The first method is based on Government's current Home Purchase Allowance (HPA) policy for domestic property interests, which is commonly known as the "seven-year rule." HPA is the difference between the market value of a notional seven-year-old flat in a comparable quality building in a similar locality 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. The unit rate of the notional seven-year-old flat for the Nga Tsin Wai project is $5,202 per square foot of saleable area.

In addition, the owners to whom the offers are made will receive an incidental cost allowance, where applicable, as an incentive for them to accept the URA's offer within 60 days. This allowance also serves as a subsidy for the removal and other expenses normally incurred in the purchase of a replacement flat. The incidental cost allowance for an owner-occupied domestic property is $106,400 or $98 per square foot ($1,050 per square metre) of saleable floor area, whichever is the higher. For a domestic property that is tenanted or vacant, the amount is $83,600.

For non-domestic properties, compensation will be based on market value plus an ex-gratia allowance. The allowance for an owner-occupied non-domestic property is 35 per cent of its market value or four times the rateable value, whichever is the higher. The allowance for a tenanted or vacant non-domestic property is 10 per cent of its market value or one time the rateable value, whichever is the higher.

The second standard method applies to properties in single ownership, which are also commonly found in the Nga Tsin Wai Village. Using this method, compensation is based on the existing use value of a property plus relevant allowances for shops and domestic units in the property or its redevelopment value plus an ex-gratia allowance of five per cent, whichever is the higher.

Compensation Package for Urban Village

The special method is a "government compensation practice plus 10 per cent" package. Currently, Government's compensation practice for resumption of urban area village properties is based on a rate representing the value of building land affected, which is also known as notional ex-gratia compensation. Furthermore, an additional allowance is given to indigenous villager-owners and for those villager-owners who occupy the properties, an ex-gratia removal allowance is payable to them as well. Using this government compensation formula as a benchmark, the URA has decided to make its offers more attractive by taking whatever is the result calculated by this formula and adding 10 per cent more to it as an incentive if the URA's offer is accepted within 60 days.
Commenting on how the value of a notional seven-year-old domestic flat is determined, the spokesman said that in accordance with its established practice the URA has appointed seven professional surveyor firms to produce valuations independently. Subsequently, the lowest and highest valuations are eliminated and the remaining five are averaged out to arrive at a per-square-foot unit rate that will be adopted for calculating the compensation. "This is a broad-based, objective and professional method that has proved to be well accepted by most owners in previous projects," the spokesman said.

"For the purpose of this project, this mechanism also applies in the calculation of the per-square-foot unit rate of the notional ex-gratia compensation and the additional allowance for indigenous villager-owners," the spokesman added.

As for the assessment of existing use values and redevelopment values for individual properties, two professional firms of valuers have been appointed by tender for their assessment.

Apart from cash compensation, the URA has decided to extend a newly introduced "Expression of Interest in Purchasing Arrangement" pilot scheme to this project so that owner-occupiers of domestic properties can express to the URA their interest in getting an opportunity to purchase a new flat in the new development at market price when the project is offered for sale. "This is designed for those who will have a need to move back to the same location for personal reasons such as to maintain their social networks," the spokesman said.

Separately, any shop owner or tenant of a multi-owned building, who runs a shop within the project site will enjoy an additional Ex-gratia Business Allowance up to three times rateable value (roughly equivalent to 36 months' rent) payable at the rate of 0.1 time rateable value for each year of continuous occupation of the premises up to a maximum of 30 years, subject to a minimum amount of $70,000 and a maximum of $500,000; this is intended for alleviating the possible business loss due to redevelopment.

Upon completion of the property acquisition, the URA will give cash compensation to tenants or make rehousing arrangements for them if they are eligible for public housing. The total cost of the project including compensation, preservation and redevelopment is estimated at about $1.24 billion.
The Nga Tsin Wai Village has an area of about 49,900 square feet. About two-thirds of the village houses have already been demolished by private owners over the past two decades. The structures currently remaining are very decrepit and the living conditions are highly unsatisfactory due to poor maintenance and lack of sanitation facilities. It is estimated that about 60 households are residing in 57 dilapidated village houses. Since an announcement of the project by the former Land Development Corporation, the affected residents have repeatedly urged the URA for its early implementation so as to improve their living environment.

Apart from improving the living environment of the residents, the URA has adopted an innovative conservation-by-design approach to achieve a "conservation-paramount" objective to preserve as many authentic structures and core elements as possible in the village whilst designing and recreating a walled village park to resurrect the ambience of the village history. At the same time, the design will enable residential development to proceed in parallel.

The URA will hold several briefing sessions to provide detailed information to the owners and tenants respectively on the arrangement for acquisition, compensation and rehousing. An urban renewal social service team of professional social workers from The Salvation Army will provide counseling service and practical assistance to residents who may encounter personal or family problems. Affected residents may call them on 2391 6733 for assistance. Interested parties may also call the URA hotline at 2588 2333 for any enquiries they may have.