Acquiring industrial buildings set to become new source of residential land supply
Standard rates pilot scheme will facilitate the redevelopment of industrial buildings
HONG KONG, 30 March 2021 – The standard rates pilot scheme that took effect on 15 March is expected to attract developers and investors to buy industrial buildings with redevelopment potential. It will be a new source of residential land supply in the urban area for developers, according to JLL's Hong Kong Residential Market Monitor, released today.
The pilot scheme for charging land premium at standard rates on lease modifications for redeveloping industrial buildings will provide developers and investors certainty on land premium calculations, and help them in decision making through better estimations on investment costs. It would also shorten the process of lease modification procedures for redevelopment and thus encourage developers or investors to acquire industrial buildings for residential development.
Norry Lee, Senior Director of Projects Strategy and Consultancy Department at JLL in Hong Kong, said: "The new scheme is expected to trigger a significant number of cases of lease modification for residential development as the lack of land supply problem has worsened, particularly in the urban area. We believe that acquiring industrial buildings with the potential of residential development will be a new source of generating residential development sites in the urban area for developers."
Nelson Wong, Head of Research at JLL in Greater China, said: "We expect To Kwa Wan, Yau Tong and Yuen Long will benefit from the scheme as a number of industrial building sites have been rezoned for Residential or Comprehensive Development Area (CDA) use, which have the flexibility to be redeveloped into a residential project."
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