Quicker conversion: Secretary for Development Carrie Lam elaborates on the plan to convert industrial buildings, as outlined in the Chief Executive's 2009-10 Policy Address.

New measures to facilitate redevelopment and wholesale conversion of industrial buildings outlined in the Chief Executive's 2009-10 Policy Address will provide suitable land and premises to meet Hong Kong's changing economic needs, Secretary for Development Carrie Lam says.

Mrs Lam said today the transformation of Hong Kong's industrial areas and buildings has not kept pace with the economic restructuring and relocation of traditional manufacturing activities to the Mainland since the early 1980s.

There are 1,467 private industrial buildings in the metropolitan area with a total floor area of 17.4 million square metres. At the end of last year, about 6.5% of the area, or more than 1.1 million square metres, was vacant.

"The sites currently occupied by some of these industrial buildings are very suitable for alternative uses. All the former industrial areas in Kowloon have been rezoned over the years into other uses, notably [business]. This land-use zoning could accommodate the great majority of activities in the six economic areas identified by the Chief Executive's Task Force on Economic Challenges. The challenge before us is how to speed up the transformation process," Mrs Lam said.

Expediting change

Three of the four initiatives are for the redevelopment of industrial buildings, while one is to encourage conversion. Mrs Lam said they will overcome problems prohibiting or slowing the transformation, such as multiple ownership, development intensity, land premiums and waiver fees.

The three measures to facilitate redevelopment are:

* to help unify ownership, lower the threshold from 90% to 80% for owners of industrial buildings situated in non-industrial zones and aged 30 years or above to apply to the Lands Tribunal for compulsory sale for redevelopment;

* to allow tailor-made lease modifications so the land premium payable for the redevelopment of industrial buildings situated in non-industrial zones will be assessed according to the optimal use and proposed intensity of the redevelopment - that is, "pay for what you build"; and,

* to give owners seeking redevelopment through lease modification the option to pay the assessed land premium by instalments over five years at a fixed interest rate.

The Policy Address also suggests allowing owners to apply at a nil waiver fee for change of use of the industrial premises for the lifetime of the building or the current lease period, whichever is earlier.

The "nil waiver fee" concession is available to applications concerning industrial buildings aged 15 years or above and situated in "Industrial", "Commercial" or "Other Usage (Business)" zones. They require a joint application by all owners.

There should not be any increases in building height, building bulk or gross floor area after the conversion and the building cannot revert to industrial use during the waiver period. The full market premium is payable when the buildings are redeveloped in future.

Applications open in April

Except for the lowering of the threshold for application under the Land (Compulsory Sale for Redevelopment) Ordinance which will be implemented via subsidiary legislation on a permanent basis, applications for the other three measures must be made within a three-year period from April 1, 2010.

"These measures can address the needs of economic development by enabling owners to revitalise and add value to their industrial buildings, thus providing new momentum for economic growth and creating jobs," Mrs Lam said.

The Lands Department will form a dedicated team to process applications for redevelopment or wholesale conversion of industrial buildings.