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HA approves arrangements for clearance of Chai Wan Factory Estate

The following is issued on behalf of the Housing Authority:

     The Housing Authority's (HA) Commercial Properties Committee (CPC) today (March 10) approved a plan to clear the Chai Wan Factory Estate (CWFE) and provide an ex-gratia allowance and other arrangements for the affected tenants. All arrangements will be the same as those for clearance of other old factory estates in the past.

     "The CWFE is a five-storey block without lift service built in 1959, comprising 378 factory units with a standard size of 18 square metres. Its design has become obsolescent and its maintenance costs keep on increasing. Currently, there are still 138 tenants occupying 280 standard units. The CPC has approved to give tenants 18 months' notice to vacate the premises," said the CPC Chairman Dr Andrew Chan Ping-chiu.

     "Both the tenancy agreement and the Housing Ordinance entitle the HA to terminate factory tenancies by giving due notice. Nevertheless, an ex-gratia allowance (EGA) will be granted to the affected tenants to assist their relocation," he said.

     About 98% of the affected tenants have "assignment right" and will be offered EGA ranging from about $88,000 to $147,000 for each standard unit. The EGA granted represents about 14 to 16 years' existing rent payable.

     "Those who wish to re-establish business elsewhere may participate in the open tender or restricted tender exercises for the newer HA factory units, where space of about 2,000 square metres is currently available," he said.

     The affected tenants may alternatively choose to relocate to factory units in the private sector which are in abundant supply. According to the Rating and Valuation Department's "Hong Kong Property Review 2010", there were 1,388,000 square metres of factory space vacant in the private sector, of which about 12% was on Hong Kong Island, as at end-2009.

     "A three-month rent-free period will be offered to displaced tenants leasing HA factory units elsewhere. A cash sum of $8,200 per standard unit will be paid to tenants not opting for the rent-free period. The total sum of EGA (including the cash sum in-lieu of rent free period) payable to the affected tenants of CWFE would be about $33 million," he added.

     The clearance of CWFE is scheduled for September 2012. The site is currently zoned "Comprehensive Development Area" under the approved Chai Wan Outline Zoning Plan. The HA considers that the site is suitable for public rental housing development and intends to seek its allocation for that purpose.

Ends/Thursday, March 10, 2011
Issued at HKT 16:29


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