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HA approves arrangements for Kowloon Bay Factory Estate Tenants affected by clearance

The following is issued on behalf of the Hong Kong Housing Authority:

     The Housing Authority's (HA) Commercial Properties Committee (CPC) today (November 29) approved the clearance of Kowloon Bay Factory Estate (KBFE) and a set of arrangements for the affected tenants. The clearance is tentatively scheduled for mid-2009.

     Built in 1975, KBFE comprises two seven-storey blocks without lift service. It has a total of 807 units, each with a standard size of 24 square metres. The HA approved the clearance of KBFE due to the increasing obsolescence of its design in comparison with current needs and the increasing costs of maintenance with age. The cleared site will be returned to the Government.

     Upon completion of the Early Surrender Scheme in 2004, more than 100 tenants of KBFE holding about 300 units (over 30%) had surrendered their premises. Currently there are 173 remaining tenancies occupying 333.5 units, of which only 200 are in active use.

     More than half of the existing affected tenants holding the "assignment right" will be offered Ex-gratia Allowances (EGAs) ranging between about $40,000 and $170,000 for each unit. Other tenants will be offered an allowance equivalent to 15 months' net rent.

     Seventy per cent of the EGA will be paid upon application and the balance upon delivery of vacant possession. Affected tenants will be given 18 months' notice to vacate their premises. The rent will be frozen from the date of announcement.

     "Although displaced tenants are not contractually entitled to any form of compensation, the HA as a responsible and reasonable landlord will offer EGAs to assist their relocation", the chairman of the CPC, Mr Liu Sing-cheong, said.

     In addition to EGAs, affected tenants who want to re-establish their business will be offered opportunities to apply for newer HA factory units through open tender or restricted tender exercises. There are about 5,000 square metres of vacant space currently available. Tenants who are leasing other HA factory units will be offered a three months rent-free period, or a cash sum of $5,500 per standard unit.

     Tenants may alternatively choose to relocate to factory units in the private sector. According to the Rating and Valuation Department's Property Review for 2007, there were over 1.2 million square metres of factory space vacant in the private sector at the end of 2006, and about 20% of it was in Kwun Tong district. "Therefore the tenants should not have great difficulty in finding accommodations for relocating their operations," Mr Liu said.

Ends/Thursday, November 29, 2007
Issued at HKT 15:19


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