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Following is a question by the Hon Vincent Fang and an oral reply by the Secretary for Transport and Housing, Ms Eva Cheng, in the Legislative Council today (December 2):
Question:
It has been learned that in recent years, The Link Management Limited ("The Link") has kept increasing substantially the rents of the shops in its shopping arcades and the stalls in its markets, resulting in many small business tenants who had operated for many years closing their business. Some of the small business tenants have indicated that they hope to continue to operate by renting the shops and stalls under the Hong Kong Housing Authority ("HA"). In this connection, will the Government inform this Council:
(a) of the rent levels and changes in rents as well as letting rates of the shops under HA in the past three years; whether HA will make reference to the practice of establishing the Business Opportunity Centre in 2003 and simplify the procedure for letting its shops and stalls, as well as give priority to the tenants of The Link in taking up the tenancies;
(b) given that a surveyor firm which has been appointed as the leasing adviser of the retail section of the development of Yau Tong Phase 4 is at the same time the sole leasing agent and valuer of some of the shopping arcades under The Link, whether the authorities have assessed if there is any conflict of interests in that situation; whether the adviser is responsible for determining the rents of the shops concerned; if so, how HA prevents the adviser from determining the rents according to the rent levels of the shopping arcades under The Link; and
(c) whether HA is still implementing its divestment strategy; if so, of the details; if not, whether HA plans to improve the operating environment in its existing shopping arcades and markets, so as to enhance their competitiveness?
Reply:
President,
Retail facilities (including markets) of the Housing Authority (HA) are normally let by tender for a fixed term of three years. It is the established policy of the HA that rents are adjusted according to the market level upon expiry of the existing tenancy. There are about 2,000 shops and 1,000 stalls under the HA. They are mainly situated in shopping arcades at 23 public housing estates, covering a total floor space of around 170,000 m2.
My reply to the three-part question is as follows:
(a) The HA maintains the rental of its commercial facilities at a reasonable level, taking into account factors such as comparable rental statistics, the physical characteristics of the premises, and the population and environmental changes of the public housing estates where the premises are located. Sitting tenants may express their views on the business environment and factors affecting the rent levels to facilitate the HA in assessing the renewal rents. The average renewal rent for commercial facilities was $270/m2, $274/m2 and $290/m2 as at the end of March in 2007, 2008 and 2009 respectively, showing a relatively stable trend. The letting rate of commercial facilities was 93%, 95% and 95% as at the end of March in 07, 08 and 09 respectively.
While the Business Opportunity Centre (BOC) set up by the HA in 2002 ceased operation in May 2005 following the HA's divestment of the majority of its commercial facilities, the HA has been actively providing interested parties with suitable venues for business operation. At present, around 100 vacant shops and stalls are available for leasing by commercial tenants through open tenders and simplified leasing modes introduced by the then BOC such as "Open Instant Tender" and "Walk-in Application on a First-come-first-serve Basis". Besides, the HA offers extra rent-free periods in letting out long-standing vacant shops and stalls to increase their attractiveness.
As the HA's commercial facilities are let by open tender, the public is welcome to take up the tenancies concerned. Interested parties can obtain updated information on the premises through the Housing Department's (HD) website, estate offices and the newspaper or by calling the HD.
(b) Assessment and determination of the rent levels of commercial facilities (including the Yau Tong Phase 4 development project, hereinafter referred to as "Yau Tong Phase 4") under the HA are carried out by the HD's in-house estate surveyors by making reference to various factors, including comparable rental statistics, the physical characteristics of the rental premises, and population and environmental changes of the concerned public housing estates. In appointing a surveying consultancy firm as the leasing adviser of Yau Tong Phase 4, the HA intends to draw in private sector experience in shopping centre design and trade mix, and to keep abreast of the latest trends in the retail market. This would facilitate operating Yau Tong Phase 4 in a market-led approach. This firm will only provide consultancy services in relation to the leasing mode, development strategy, overall design, marketing and publicity of Yau Tong Phase 4. It will not take part in rent fixing or represent the HA in contacting potential tenants directly. It is therefore unlikely that the appointment will give rise to any conflict of interest.
(c) At present, the HA has no plan to divest its properties further. It will continue to formulate conversion and improvement programmes for existing commercial facilities to meet customer needs. It will also organise more promotional activities to enhance the business environment in these venues.
Ends/Wednesday, December 2, 2009
Issued at HKT 14:14
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