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Property acquisition for two URA preservation cum revitalisation projects to start soon

The Land, Rehousing & Compensation Committee of the Urban Renewal Authority (URA) has resolved today (Thursday) that eligible owner-occupiers of domestic properties affected by the two preservation cum revitalisation projects at Shanghai Street / Argyle Street and Prince Edward Road West / Yuen Ngai Street would be offered $8,010 and $9,391 per square foot of saleable floor area respectively. The URA will issue offer letters to owners by 31 March 2010.

The two projects involve some 73 property interests and 20 of the buildings within the two sites are pre-war verandah-type shophouses of outstanding heritage value.

The acquisition offers for domestic properties are based on the Government's Home Purchase Allowance (HPA) policy in which HPA is the difference between the market value of the acquired property and the value of a notional replacement flat of seven-year-old in a similar locality. In addition to the market value of the acquired properties, eligible owner-occupiers will receive the full HPA amount whereas eligible owners holding wholly tenanted or vacant domestic properties will receive a supplementary allowance (SA) up to half of the HPA.

For illustration purpose, if the above unit rate for Shanghai Street project i.e. $8,010 applies to the owner-occupier of a domestic property with a saleable area of 550 sq.ft., the offer amount (market value plus HPA) is $4,405,500 and with a gross area of 610 sq.ft. for that unit, the gross area unit rate of that unit is about $7,222.

For the Prince Edward Road West project, if the above unit rate i.e. $9,391 applies to the owner-occupier of a domestic property with a saleable area of 1,100 sq.ft., the offer amount (market value plus HPA) is $10,330,100 and with a gross area of 1,220 sq.ft. for that unit, the gross area unit rate of that unit is about $8,467.

A spokesman of the URA said: "In accordance with established mechanism, the URA has appointed seven independent valuation firms for the valuation of the unit rate of the notional seven-year-old flat. The whole process is virtually transparent, open and fair."

Owners will have ample time to consider the URA's offers and to accept them within 60 days after receiving the offers.  Domestic owners will also receive an Incidental Cost Allowance (ICA) as an incentive for them to accept the offers within the 60-day period.  The current ICA for owner-occupied domestic property is $112,700. For domestic property that is wholly tenanted or vacant, the ICA is $88,300.

For non-domestic properties, the acquisition offers to eligible owners 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 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. The market value of each non-domestic property is based on the higher valuation of two independent valuation firms appointed by the URA.

Eligible owners and tenants who operate business in the affected shops will enjoy an additional Ex-gratia Business Allowance (EGBA) up to three times rateable value 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 allowance is intended for alleviating the possible business loss due to redevelopment.

In view of the local characteristics of the Prince Edward Road West project, the URA is considering introducing a Local Flower and School Shop Arrangement (LFSSA) for existing operators in the businesses who are interested to re-establish their operations upon restoration of the premises. Subject to meeting the eligibility criteria, they will be given priority to lease ground floor shops of shophouses within the project area at the prevailing market rents.

"In accordance with our policy, landlords will not get any additional compensation for terminating the tenancies with their tenants since their eligibility to compensation is based on their tenanted status on the date of freezing survey," the spokesman added.

Upon completion of the property acquisition, the URA will make ex-gratia payment or rehousing arrangement for the tenants concerned, if eligible.

The URA will organise a series of briefings for the affected owners, residents and shop operators to explain to them the acquisition and compensation and rehousing arrangements.  It has also appointed an urban renewal social service team staffed by the Salvation Army to provide professional and practical services alongside URA frontline staff for the affected occupants.  Residents and owners who want to make enquiries may also call the URA hotline 2588-2333.

The URA has earlier organised a series of consultations on the future adaptive re-use of these shophouses.  "Our initial intention is to put them for use and activities that are deemed sustainable and compatible with the goals of preserving these shophouse buildings and enhancing local characteristics," the spokesman added.