Conversion Of Proposed Office Space To Residential

Vision To Create HK’s 2nd CBD Impacted By Conversion Of Proposed Office Space To Residential

HONG KONG – Plans to turn Kai Tak in East Kowloon into the city’s 2nd central business district (CBD) could potentially be affected by the government’s proposal to convert 5 plots of commercial land at the site of the defunct Kai Tak Airport to residential use, as it would lead to a loss of 4.5 million sq ft of office premises, reported the South China Morning Post (SCMP) on Wednesday morning (3 March, SGT).

During the new budget announced on 24 February 2021 by Financial Secretary Paul Chan Mo-po, he revealed that the 5 land parcels could accommodate 5,800 private residential properties.

However, CHFT Advisory and Appraisal estimated that the proposed move would slash the commercial space originally planned for Kai Tak by approximately 20 percent.

“Kai Tak is no longer what we thought or dreamt it would be,” said CHFT’s Senior Director Alex Leung.

During the Policy Address for 2011 to 2012, Hong Kong’s former Chief Executive Donald Tsang announced plans to turn Kowloon East into another CBD, and Kai Tak has been a crucial part of that plan, which was repeated in succeeding policy addresses.

In October 2017, property consultancy CBRE described the amount of commercial space to be built in Kai Tak as “unprecedented” as it’s 53 times the size of Central’s International Finance Centre.

But the conversion could slash the gross floor area (GFA)of the proposed office space there by around 4.47 million sq ft, said CHFT. That makes up 11.9 percent of the overall 37.67 million sq ft of commercial space expected to enter Kowloon East’s market by 2022, based on a policy address announced last November. It is also more than 20 percent of the 21.5 million sq ft of commercial premises in Kai Tak alone as shown by development plans.

“This is different from the original plan for Kai Tak.” It doesn’t bode well for plans to transform the area into Hong Kong’s 2nd CBD, said Knight Frank’s Executive Director Thomas Lam.

Meanwhile, Development Secretary Michael Wong last week justified the plans to convert the 5 land parcels in Kai Tak as previous tenders for 3 of the plots 2 years ago didn’t meet the authorities’ undisclosed reserve price. The sale of one of the plots, Area 4C site 4, was even cancelled after Goldin Financial Holdings walked away from the deal.

Furthermore, Wong argued that the area will still have enough office space to become Hong Kong’s 2nd CBD as the entirety of Kowloon East, including Kowloon Bay & Kwun Tong, will ultimately accommodate 43 million sq ft of commercial premises compared to Central’s 51.67 million sq ft of commercial space.

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