LCQ16: Supply of offices in Hong Kong

     Following is a question by the Hon Abraham Shek and a written reply by the Secretary for Development, Mr Paul Chan, in the Legislative Council today (June 26):


     A study report published recently by a property consultancy company points out that the office space shortfall in Hong Kong between 2013 and 2020 is anticipated to be as high as four to eight million square feet, equivalent to the area of four to eight blocks of Two International Finance Centre. In addition, as indicated in the Hong Kong Property Review 2013 compiled by the Rating and Valuation Department, office rentals have been rising for four consecutive quarters, and the overall rental index for the fourth quarter of 2012 rose by 7 per cent from that of the previous year. In this connection, will the Government inform this Council:

(a) whether the authorities have estimated the supply and demand of offices of various grades in Hong Kong in the coming decade; if they have, of the details; if not, the reasons for that;

(b) of the respective additional areas of offices of various grades, calculated on the basis of the areas of the commercial sites in the statutory plans already made or under preparation by the authorities under the Town Planning Ordinance (Cap. 131), and the timetables for introducing them into the market; and

(c) of the authorities' strategies to expedite the supply of offices of various grades to mitigate the rising trend of office rentals, thereby easing the operational pressure of small and medium enterprises as well as maintaining Hong Kong's status as a regional business hub?



     To maintain Hong Kong's position as a leading financial and commercial centre, the Government will continue to adopt a multi-pronged approach to ensure a steady and adequate supply of quality office for supporting the continued economic growth of Hong Kong.

     My reply to the question raised by the Hon Abraham Shek is as follows:

(a) The Hong Kong 2030: Planning Vision and Strategy (HK2030 Study) provides a long-term planning strategy on various types of land uses, including Grade A offices in Central Business District (CBD). According to the forecast of the HK2030 Study, CBD Grade A office space has to increase by 2.7 million square metres in gross floor area (GFA) from 2003 to 2030 in order to meet market requirements. There is no estimation of demand for offices of other grades in the next 10 years since such demand is more sensitive to market fluctuations.

     It is difficult for the Government to make projections on future supply of offices in Hong Kong as office developments are essentially market-driven. That said, according to the information of the Rating and Valuation Department, the estimated completion of offices in Hong Kong for 2013 and 2014 will be around 157 800 square metres and 158 900 square metres (Note: The figures refer to "internal floor area") respectively.

(b) On statutory plans prepared in accordance with the Town Planning Ordinance, "Commercial" zone covers various always permitted uses, and "office" use is only one of them. "Commercial" zone also covers private or government land with existing developments, or various types of commercial uses currently under planning. Therefore, we cannot estimate the additional floor areas of different office grades and the timing of their market availability from the area of the "Commercial" zone designated on the relevant statutory plans.

(c) As set out in the 2013 Policy Address, the Government will continue to adopt a multi-pronged approach to increase the supply of housing land, while at the same time supply more commercial land and facilities (including offices) to facilitate the further development of different economic activities in Hong Kong. The Administration is actively implementing a series of measures described in the following paragraphs with a view to increasing the supply of commercial land and facilities (including offices).

     First, the measures on "Energizing Kowloon East" will help develop Kowloon East into another core business district of Hong Kong. According to the 2013 Policy Address, Kowloon East has the potential to supply an additional office floor area of about 4 million square metres. To expedite the process, we are considering relocating the existing government facilities in the two action areas of Kowloon East and making available some vacant and appropriate sites in the action areas to the market as soon as possible. It is expected that these two action areas will be able to provide about 500 000 square metres of floor area in total for office and other uses.

     Besides, in the Kai Tak Development Area, 14 sites are zoned "Commercial" under the Kai Tak Outline Zoning Plan. Five of them are located at the Kai Tak city centre on the North Apron area, another three are in the corner of the South Apron area at the Kowloon Bay waterfront, and the remaining six are located in the Runway Area. These sites, with a total area of about 14 hectares, are reserved for commercial uses, including offices, shops, hotels, etc. They will be made available to the market by phases after the relevant infrastructure works are progressively completed.

     To tie in with the transformation of Kowloon East into a business district and meet the public expectation for increasing housing supply in urban areas, we are reviewing the land use planning in the Kai Tak Development Area, including exploring the scope for increasing office and housing supply in the North Apron area, the South Apron area and the former Runway Area, without compromising the planning vision and the land supply in the coming five years. The Government will conduct detailed technical studies to assess the impacts on the neighbouring areas from the environmental and traffic aspects, etc. Public consultation will be carried out when the results of the studies are available.

     Regarding the provision of floor space for commercial uses (including office use), the Government will continue to increase the supply of commercial/business sites through land sale. A total of nine commercial/business sites were sold by the Government in the last two years, providing about 400 000 square metres of GFA. The 2013/14 Land Sale Programme offers a total of nine commercial/business sites, which are capable of providing about 330 000 square metres of GFA. We also expect that the long-term development plan for the future New Central Harbourfront will provide about 90 800 squares metres of new floor space for office uses. The sites concerned will gradually be made available for development after the completion of the Central-Wanchai Bypass and the related works in 2016/17. Furthermore, the "Government, Institution or Community" sites in the existing core business districts, including the Murray Road Car Park in Central and the Rumsey Street Car Park in Sheung Wan, etc., will be converted to commercial uses. The Government will continue its proactive land sale approach to increase the supply of commercial/business sites.

     Furthermore, the Government announced in October 2009 a set of measures to facilitate the redevelopment and wholesale conversion of old industrial buildings. These measures came into effect on April 1, 2010, aiming at providing more floor space for suitable uses to meet Hong Kong's changing social and economic needs. Up to the end of May this year, the Lands Department approved 70 applications under the measures, and the projects concerned have a capacity to provide a total GFA of about 700 000 square metres of converted or new floor space. Of the approved applications, more than half applied for change into "office" use, among other new uses.  

     Meanwhile, the current government accommodation policy is to relocate, if feasible, government offices which are not location bound out of high-value areas (including core business districts), and as far as possible make use of government-owned properties to reprovision government offices accommodated in leased premises. This will not only provide long-term office accommodation for the departments concerned, but will also reduce rental expenditure. The properties so released will in turn help increase the supply of commercial office space, thereby facilitating the development of different types of economic activities.

     Recent initiatives in this connection include the sale of government-owned properties covering a portion of the 3rd floor and the whole of the 4th, 5th and 6th floors of Citibank Tower, No. 3 Garden Road, Hong Kong (which was formerly used by the Legislative Council Secretariat as its office). The Government already signed the Sale and Purchase Agreement in May this year. Upon completion of the transaction, about 6 200 square metres of Grade A office space in Central will be available in the market for commercial uses.

     Besides, similar initiatives of releasing office space by the Government in the next few years include:

(1) Relocation of the Trade and Industry Department (TID): The Government is now carrying out the construction works for the Trade and Industry Tower at the Kai Tak Development Area, which is expected to be completed by end 2014. Upon relocation of TID to the new tower, more than 18 000 square metres of floor area in the Trade and Industry Department Tower in Mong Kok will be released for commercial uses.  Meanwhile, among the 33 000 square metres in net operating floor area of the new tower, about half will be used for reprovisioning of government offices accommodated in leased premises mostly in South East Kowloon;

(2) Relocation of the Department of Justice (DoJ) to the former Central Government Offices (CGO): Upon relocation of DoJ to the former CGO by stages starting from 2015, its existing offices in the Queensway Government Offices (QGO) and leased premises will gradually be vacated. Offices vacated in QGO will mainly be used for reprovisioning of other government offices currently accommodated in leased premises in Central and Admiralty;

(3) Reprovisioning of the three government office buildings at the Wan Chai waterfront: The Government is now actively planning for the reprovisioning of the three government office buildings at the Wan Chai waterfront and gradually moving the affected departments to the new government office buildings in non-core business districts. After the completion of the new government office buildings, we will arrange the departments to move out of the three government office buildings at the Wan Chai waterfront by stages such that the vacated floor area can be released as soon as possible for renting out, thereby increasing the supply of Grade A office space in Wan Chai. After the completion of the entire relocation plan, we will consider putting the three government office buildings on sale at an appropriate time. It is expected that 175 000 square metres of floor area will then be made available for commercial uses; and

(4) Construction of the West Kowloon Government Offices (WKGO): The proposed WKGO will provide a total net operating floor area of 50 000 square metres, of which about 30 000 square metres will be used for reprovisioning some of the offices of the Buildings Department, Civil Engineering and Development Department and Transport Department which are currently accommodated in leased premises in Wan Chai, Tsim Sha Tsui, Mong Kok and Kwun Tong. It will also provide office space for reprovisioning other departments in the three government office buildings at the Wan Chai waterfront.

     In conclusion, the Government will continue to monitor closely the demand and supply situation of offices in Hong Kong and proactively pursue appropriate land use planning, relevant urban design, district enhancement works, and convenient transport networks. In doing so, we seek to develop more high quality new office clusters with a view to meeting the market demand and continuing to strengthen Hong Kong's competitiveness.

Ends/Wednesday, June 26, 2013
Issued at HKT 15:18