The proposed conversion of five parcels of commercial land at the former international airport site to residential use would incur a loss of 4.5 million square feet of office space, a move that could deal a blow to the role of Kai Tak in the transformation of East Kowloon into Hong Kong’s second core business district.
The rezoning of the five commercial plots would yield about 5,800 private flats, according to Financial Secretary Paul Chan Mo-po’s budget unveiled last Wednesday. It will reduce the amount of commercial space originally planned for Kai Tak by about a fifth.
“Kai Tak is no longer what we thought or dreamt it would be,” said Alex Leung, senior director at CHFT Advisory and Appraisal.
In the 2011-12 Policy Address, former Chief Executive Donald Tsang revealed plans to transform Kowloon East into a central business district to sustain Hong Kong’s economic development. Kai Tak has been an important part of the plan. The initiative was reiterated in subsequent policy addresses.
The scale of the new commercial space offered in Kai Tak would be “unprecedented” at 53 times the size of the International Finance Centre in Central, according to an estimate by CBRE in October 2017.
The potential rezoning could shrink the commercial gross floor area by about 4.47 million sq ft, according to estimates by CHFT.
That is about 11.9 per cent of the total 3.5 million square metres (37.67 million sq ft) of commercial floor space forecast for 2022 in Kowloon East, according to a policy address in November last year. It is just over 20 per cent of the two million square metres of commercial floor area in Kai Tak alone, according to the development plan.
“This is different from the original plan of Kai Tak,” said Thomas Lam, executive director at Knight Frank. “It is not very good for [achieving] the vision for the Kai Tak development area [to become] the second central business district.”
The development secretary Michael Wong last week defended the plan to rezone the five commercial sites at Kai Tak for housing, noting previous bids for three of the plots had failed to meet their reserve price.
Wong said the whole of Kowloon East, including Kwun Tong and Kowloon Bay, would ultimately have about 4 million square metres of commercial space, almost catching up to Central’s 4.8 million square metres, so the area would still be on its way to becoming the city’s second central business district.
Under current market conditions, there will be a sufficient supply of commercial land – which is difficult to sell – in the future, according to surveyors.
Three of the five parcels failed to sell over the past two years because the bids of property developers did not meet their undisclosed reserve price. Area 4C site 4 was even withdrawn from sale after being abandoned by Goldin Financial Holdings in 2019.
Colliers International has a different take.
The rezoning will help to relieve the burden of potential competition amid a large surplus in the office market, said Hannah Jeong, head of valuation and advisory services at Colliers.
“Looking from experience, not all the proposed sites will be included in land sales during the financial year, hence we believe that the supply-and-demand imbalance in the housing market will not experience much relief in the near future,” she said.
