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Written by: Liu Yanwen
2021-06-05 15:27
The last update date: 2021-06-05 15:27
This year marks the 20th anniversary of the establishment of the URA. Chief Executive Wei Zhicheng stated on his blog on May 30 that this year is the URA’s "harvest period". Eight projects have been cleared, and he will take this opportunity to supplement the URA The cash flow of the bureau.
Wei Zhicheng also said that he has submitted a business plan for the next five years, which covers a number of newly curated projects and projects that have been launched but not completed. The total cost is more than 100 billion yuan, and 18,000 residential units will be provided. The bureau’s largest and most expensive business since 2001.
Looking back, the URA has always emphasized the need to "harvest" sufficient funds and stable finances before it can propose more redevelopment projects. It seems to focus on profit-seeking rather than renewing the urban area and improving the quality of citizens.
The URA’s upside-down service performance stems from the fact that as a public organization, they need to be "self-financing"-although this is the URA's "inherent" structure, it should not be forgotten. , Put profit above its own responsibilities.
The URA, which is called the "Urban Renewal Authority" in full, is a statutory public organization established by the government to carry out redevelopment and building rehabilitation in old areas.
The URA was formerly a land development company established in 1988. It was mainly a self-financing public organization established by the British Hong Kong government to solve the problem of aging buildings. It was responsible for urban renewal. Afterwards, due to the 1997 financial tsunami, many redevelopment projects were delayed. As of 2000, the company's net assets were only 290 million yuan.
The SAR government then invested 10 billion yuan in 2001 to establish the current URA, which also operates on a self-financing basis. In the beginning, the URA accumulated losses of up to 3 billion yuan at the beginning of its establishment due to multiple redevelopment projects. Negative equity was recorded for two consecutive years.
At first glance, the operation of the URA is quite difficult, but after the redevelopment projects are completed and sold, this situation no longer occurs.
In 2005, the URA’s financial situation reversed and its net assets increased year by year. By 2020, the bureau’s total assets had reached more than 53 billion yuan.
Wei Zhicheng has repeatedly emphasized in his blog that the reconstruction plan in the next five years will impose a huge financial burden on the URA, which seems to be "pretending to be poor."
(Photo by Zhang Haowei)
2017/18 surplus reached 12 billion yuan, the most profitable project net surplus of 6.8 billion yuan
Wei Zhicheng described this year as the URA's "harvest period". Next year, he may invite developers to tender and collect upfront payments from them to supplement cash flow. He also kept on his blog and emphasized that the redevelopment plan in the next five years will bring them to life. There is a huge financial burden.
It is true that urban renewal projects must have sufficient funds to be successful, but the URA often emphasizes that they have a financial burden and that redevelopment projects pose financial risks to the bureau, which seems to be "pretending to be poor."
In fact, as long as you check the URA's annual reports in recent years, its financial status is clear at a glance.
According to statistics in 2016, "Hong Kong 01" showed that the net assets of the URA at the 15th anniversary of its establishment were 25 billion yuan, and in just five or six years, the assets of the URA had doubled.
On the occasion of the 20th anniversary of the establishment of the URA, "Hong Kong 01" once again reviewed the URA's 2016-2020 annual report and found that most of the annual surplus exceeded 3 billion yuan.
As of 2017/2018, the bureau's annual surplus has reached as high as 12 billion yuan. This figure has never seen an annual surplus since the establishment of the URA.
Although Hong Kong has experienced social events and the impact of the epidemic in 2019 and 2020, the bureau’s annual surplus instantly dropped to 2.3 billion yuan and 117 million yuan, but due to the "big harvest" from 2016 to 2018, the cumulative surplus has reached 37 billion yuan, which is 2015 The annual accumulated surplus of the bureau more than doubled.
In addition, the URA has so far carried out more than 60 projects, and most of the completed projects have recorded surpluses.
The four real estate projects that made the most profits were the Wan Chai Lee Tung Street/McGali Street project with a net surplus of 6.8 billion yuan, the ``Huihui'' project, and the Xiyingpan 1st/Second Street project ``Jincheng'' with a net surplus of 2.87 billion yuan "The Peak", the Tai Kok Tsui Cherry Street project "Hai Peach Bay" with a net surplus of 1.78 billion yuan, and the Tsim Sha Tsui Hanoi Road project "The Masterpiece" with a net surplus of 1.67 billion yuan.
Among them, the "Huihui" and "The Masterpiece" are projects completed in the past five years, and the "Huihui" with the largest net surplus is also invested by Sino Land, the developer that the URA most frequently cooperates with.
The Lee Tung Street/McGali Street project in Wan Chai has a net surplus of 6.8 billion yuan.
(Photo by Zhang Haowei)
Furthermore, the first phases of the Kwun Tong City Centre Redevelopment Project, the second and third development areas, "Kay Place", public transport interchanges, hawker markets, shopping malls, etc. will all be completed this year, while the average of "Kay Place" The price per square foot is 23,000 yuan or more, plus rents from shopping malls and markets, and the URA's revenue is expected to rise sharply by then.
It can be seen from the financial situation of the URA in recent years that their financial pressure is not as "challenging" as Wei Zhicheng described. They all rely on rebuilding old districts and constructing high-end housing that ordinary citizens or cannot afford. The profit earned by each project It can be described as a lot.
Owning the "Shangfang Sword" of land resumption can also repossess the property at a very low price
Wei Zhicheng also mentioned on his blog that he will study the reconstruction of the old areas of Yau Ma Tei and Mong Kok. If the plan starts to enter the project reserve stage, the URA will need to spend more than one trillion yuan to start the reconstruction plan, and the plan will be divided into 20 cycles.
He also said that the bureau needs to spend huge financial resources to purchase old buildings every cycle, and also collect upfront funds from developers in a non-losing property market environment.
It is true that the old areas in Yau Ma Tei and Mong Kok are quite large, and the funds required for planning and redevelopment must be huge.
But for Wei Zhicheng's claim that financial pressure will come from the acquisition of old buildings, this argument is debatable.
The URA is a public organization established by the government and does not belong to any government department, but magically, the URA has been given a lot of resources and public powers by the government.
In the first five years of the establishment of the URA, that is, from 2002/2003, the government passed a budget to provide a total of 10 billion yuan in batches over the next five years.
Later, the financial situation of the URA gradually improved, but if necessary in the future, the government will also inject capital into the bureau.
In addition, the URA’s reconstruction plan can be exempted from the government’s land premium and the "right to high-altitude development" can be obtained for free.
The most frustrating thing is that the URA can reclaim land under the Urban Renewal Ordinance and the Land Resumption Ordinance. Take the latter as an example. If the bureau and the owner cannot reach a consensus on the acquisition, the bureau can apply to the government for the use of the land. The ordinance reverts land to public ownership, and the resumption of Yue Man Square in the fifth phase of the Kwun Tong Town Centre Redevelopment Project is one example.
In addition to the above privileges, the URA can purchase the land or unit from the owner at a very low price.
For example, the URA started to acquire properties for the Lai Chi Kok Road/Guilin Street and Yi Kuk Street projects in Sham Shui Po in 2006. At that time, the purchase price of the owner-occupied property was only $3,894 per square foot of usable area.
Later, the URA cooperated with the Yangtze River Group to build a high-end residential "Fenghui", which is currently priced at RMB 15,000 to RMB 20,000 per square foot.
It is not difficult to see that the URA has a great advantage in acquiring old buildings. Compared with private acquisitions by developers, the URA must use less financial resources than developers.
Wei Zhicheng said that the URA will study the reconstruction of old areas in Yau Ma Tei and Mong Kok, and it is expected that trillions of dollars will be spent on the project.
(Photo by Luo Junhao)
Has the URA become a real estate developer?
The URA was formerly the Land Development Corporation, and it is understandable that the government set it as "self-financing" when it established the URA.
However, under this setting, the URA lost the original intention of its establishment.
The purpose of the redevelopment of the old district is to promote the sustainable development of the Hong Kong community and improve the living environment of the citizens, not to rebuild old buildings into high-end housing, drive the original residents out of the district, and double the newly built units Sell it at a price and earn more profits.
From the above survey, it can be seen that most of the old streets rebuilt by the URA have all become "expensive buildings" that Hong Kong people cannot afford.
Even the projects jointly developed by the URA and the Housing Association have become expensive private housing estates. Does the URA promote the sustainable development of the community or the financial development of the organization?
As a public organization, the URA has public powers granted by the government. It should not make profit as its primary goal. It should shoulder social responsibility and be citizen-oriented.
The URA also stated on its website that two of their concepts are "people-oriented" and "responsibility". Unfortunately, the bureau seems to have failed to uphold these two important beliefs over the years.
This year is the 20th anniversary of the URA, and the bureau has already thought about the plan for the next five years. Perhaps it is time to put the bureau’s work policies out of order and not to reduce oneself to a real estate developer who only knows how to make money.
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