Revitalizing industrial building policy seems unhelpful
The Hong Kong government plans to reactivate the policy of revitalizing industrial buildings for non-industrial purposes, such as cultural and creation activities, but some tenants complained that this policy does not help them but heavily increases their fiscal burden.
Revitalizing policy causes sharp rental increase
The policy was first introduced in 2010, which allows the owners applying for renovation and reconstruction of the industrial buildings whose property age is over 15 years and turn those buildings into commercial use. It includes commercial offices, restaurants, retail and service industries, recreational and entertainment facilities and hotels.
"The factories become a money-making tool and the policy does not really benefit the cultural and creative industry," said Kwan Cheuk Chiu, the economist of ACE Centre for Business and Economic Research. Some investors speculated in factory buildings to make profits. "The price and the rental of industrial buildings soared at the same time," Kwan said. He believed that the policy distorted the property market and had little help for small business survival.
The average rent of Kowloon industrial buildings is most expensive at HKD181 per square meter in 2016, increasing by 60 percent compared to 2010. The rent and price of industrial building spaces in the New Territories recorded the highest growth of 70 percent and 190 percent, according to the data provided by the Rating and Valuation Department.
buildings.Local arts business stuck in financial trouble
As the soaring of rents, some of the local bands ended their business or moved to smaller units in remote areas as they could not afford the expensive rental. "The rent of a 700 feet industrial building unit in Tsuen Wan almost doubled from HKD7000 in 2009 to HKD12000 in 2017,’’ said Chan Tsz Kong, the head of local band of the Amazing Music Staff.
The expensive rent has put arts groups into financial problems. Yeung Ping Kei, FM Theatre Power’s chief Artistic officer, described the current rental status as in ‘chaotic-time’. He does not know how
much capital is sufficient under the unpredictable and dynamic property market. With a limited budget, he felt it is hard to pursue high quality products.
The 2017-2018 policy speech stimulated the factories property market and increased the transaction volume
The Midland Realty's property sales registration statistics recorded the sales of 17 whole blocks of industrial buildings in the first nine months of 2017 with total amount of HKD12.093 billion, the highest in 6 years.
The market predicted that the transaction volume of industrial flats and buildings will continue to rise due to the revitalization policy.
The first round of policy is completed and it is discovered that the majority of revitalization applications finally turned into magnificent commercial buildings, hotels and shops. Can the cultural and creative young artists and startups survive under the new policy?
《The Young Financial Post 新報人財經》