LCQ1: Costs of developing and operating public housing
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Following is a question by Dr the Hon Wendy Hong and a written reply by the Secretary for Housing, Ms Winnie Ho, in the Legislative Council today (April 30):
Question:
The 2025-2026 Budget mentioned that the total public housing supply would reach 190 000 units in the next five years. Regarding the costs of developing and operating public housing, will the Government inform this Council:
(1) given that the Government has been granting land for the development of public housing at nominal premium, premium below the market value or nil premium, of the respective amounts of land premium waived for public housing projects of the Hong Kong Housing Authority (HA) and the Hong Kong Housing Society (HKHS) as well as the number of units involved in each of the past five and the coming three financial years, and set out in the table below a breakdown by projects (i.e. (i) public rental housing (PRH)/Green Form Subsidised Home Ownership Scheme (GSH) and (ii) other subsidised sale flats under HA, as well as (iii) rental estates and (iv) subsidised sale housing projects under HKHS):
| Financial year | HA | HKHS | ||||||
| (i) | (ii) | (iii) | (iv) | |||||
| Amounts of land premium waived | Number of units involved | Amounts of land premium waived | Number of units involved | Amounts of land premium waived | Number of units involved | Amounts of land premium waived | Number of units involved | |
| 2020-2021 | ||||||||
| ...... | ||||||||
| 2028-2029 | ||||||||
(2) of the respective average construction costs (including (i) per square foot of the construction floor area and (ii) per flat) of PRH/rental housing units and subsidised sale flats constructed by HA and HKHS in each of the past five and the coming three financial years, with a breakdown by type of projects;
(3) of the respective expenditures spent by HA and HKHS on site formation and infrastructural works for public housing in each of the past five and the coming three financial years, and the respective numbers of flats involved, as well as the respective ratios of expenditures on PRH/rental estates and subsidised sale flats;
(4) given that according to the paper on the budgets and financial forecasts issued by HA in January this year (the paper), the largest expenditure item under the rental housing operating account is the item "other recurrent expenditure", of the expenditure/estimates incurred by each of the sub-items of this item in each of the past five and the coming three financial years;
(5) of the actual expenditure involving government rent and rates in HA's rental housing operating account in each of the past five financial years, and the amount of rates concession provided by the Government in each of these years; and
(6) given that according to the paper, HA's construction expenditure included items such as "Government non-reimbursement projects", "Government-funded projects" and "in-house supervision and administration costs", of the specific work covered by these items?
Reply:
President,
In consultation with the Lands Department, the reply to the question raised by Dr the Hon Wendy Hong is as follows:
(1) In the past five and coming three financial years, the number of units involved in the public housing projects of the Hong Kong Housing Authority (HA) and the Hong Kong Housing Society (HKHS), and the respective amounts of land premium waived, are set out by year at Annex.
(2) As a financially autonomous public body, the HA funds its public housing programmes with its own resources. Each year, the Housing Department (HD) prepares the average construction costs per flat of Public Rental Housing (PRH)/Green Form Subsidised Home Ownership Scheme (GSH) and other Subsidised Sale Flats (SSF) projects based on the cost of building tenders approved by the HA in the preceding financial year. The construction costs will be released by the HA Finance Committee after being considered in its meeting.
As the number of building tenders approved by the HA in each financial year and factors such as scale and design of projects, market conditions, etc. are different, the average construction cost per flat varies year to year. From 2020-21 to 2023-24 financial years (Note 1), the average construction costs per flat of PRH/GSH projects and other SSF projects based on the cost of building tenders approved by the HA are set out below:
| Financial Year | Average construction cost per flat ($) (approx.) | |
| PRH / GSH | Other SSF | |
| 2020-21 | 650,000 | 760,000 |
| 2021-22 | 760,000 | 900,000 |
| 2022-23 | 920,000 | 1,090,000 |
| 2023-24 | 970,000 | 1,150,000 |
Each year, the HD also reports the average construction costs for superstructure (Note 2) of the preceding financial year to the HA. From 2020/21 to 2023/24 financial years (Note 3), the average construction costs per square foot of construction floor area (ft2-CFA) for superstructure are set out below:
Financial Year |
Average construction cost per ft2-CFA for superstructure ($) (approx.) |
|
| PRH / GSH | Other SSF | |
| 2020-21 | 950 | 1,040 |
| 2021-22 | 1,140 | 1,030 |
| 2022-23 | 1,130 | 1,200 |
| 2023-24 | 1,330 | 1,370 |
According to existing mechanism, the HD closely monitors changes in market conditions. In compiling and managing the cost budget of new projects, the HD will take various factors into consideration, including tender price trend, anticipated rate of price increase, development programmes, etc. to ensure smooth implementation of public housing schemes.
To further enhance cost-effectiveness of public housing construction, the HD will continue to explore and implement enhancement measures on construction cost control.
The study direction includes the development of a framework for optimising construction cost control, covering areas such as planning, design, application of advanced technologies and innovative construction methods, procurement models, and approval processes. The framework enables a thorough review and optimisation of various processes to effectively manage the construction costs. It also acts in concert with the inter-departmental "Action Group for Expediting Construction for Public Housing" led by the Secretary for Housing, which identifies, streamlines, and resolves inter-departmental issues encountered during public housing developments through strengthening inter-departmental co-operation so as to expedite the progress and further enhance cost-effectiveness of public housing projects.
According to the information provided by the HKHS, from 2020/21 to 2023/24 financial years (Note 4), the average construction cost per rental flat remained at around $1.1 million based on the project contract sum awarded by the HKHS. As for the HKHS's SSF, each of which is equipped with a green balcony and utility platform, interior finishes such as tiled flooring, partition walls and doors for each room, as well as household appliances such as air conditioners, water heater, cooking hobs, etc., the average construction cost per flat was around $1.6 million.
Due to the differences in design and provisions of the HKHS's and the HA's projects, generally speaking, the average construction cost per flat of the HKHS would be about 15 to 30 per cent higher than that of the HA.
The HKHS is actively enhancing its cost efficiency as well as promoting construction digitalisation by applying Digital Works Supervision System and Smart Site Safety System, with a view to enhancing quality control and project management efficiency.
(3) The Government's expenses under the Capital Works Reserve Fund (CWRF) Head 711 are for the implementation of public housing-related site formation and infrastructure projects undertaken by the Government, while the HA is responsible for the expenditure on the construction of public housing. Besides, quite a number of projects associated with the supply target of public housing are funded by other heads of expenditure under the CWRF.
As for Head 711 under the CWRF, the yearly expenditures of works projects in the past five and current fiscal year (Note 5), including infrastructure works with funding approved or pending funding approval by the Finance Committee to support the implementation of public housing developments undertaken by the HA, are tabulated below:
| Financial Year | Actual / Revised Estimate / Estimate Expenditure (Note 6) ($ million) |
| 2020-21 | 626.9 |
| 2021-22 | 1,140.8 |
| 2022-23 | 1,723.8 |
| 2023-24 | 2,469.0 |
| 2024-25 | 3,283.8 |
| 2025-26 | 3,449.9 |
As for Head 711 under the CWRF, the expenditures for the past five financial years involve about 98 000 flats for completion in 2024/25 or before, comprising about 83 000 PRH/GSH flats and about 15 000 other SSF flats. The expenditure ratio of the two is about 74 per cent and 26 per cent.
Besides, for Head 711 under the CWRF, some 64 000 flats are estimated to be completed in the coming five-year period (Note 7) (i.e. 2025/26 to 2029/30), comprising about 44 000 PRH/GSH flats and about 21 000 other SSF flats. The expenditure ratio of the two is about 56 per cent and 44 per cent. During project development, the HA will maintain flexibility in housing types and make timely adjustments of the respective supply in order to respond more appropriately to the needs of the community.
As regards the HKHS's rental and SSF projects, most of the sites handed over to the HKHS by the Government have had the site formation and infrastructure works completed. From 2020/21 to 2025/26 financial years, the HKHS's total expenditure on site formation works (such as slope maintenance and stabilisation) and infrastructure works (such as temporary roads, road widening, etc.) was approximately over $300 million, concerning six projects.
(4) "Other recurrent expenditures" of the Rental Housing Operating Account are mainly expenses related to estate management, including security, cleansing, electricity charges, estate property management and management fees for estate common areas. The related expenditure for the past five financial years and the next three financial years are as follows:
| Financial Year | Other Recurrent Expenditure (Note 8) ($ million) |
| 2020-21 | 5,171 |
| 2021-22 | 5,481 |
| 2022-23 | 5,754 |
| 2023-24 | 5,930 |
| 2024-25 | 6,426 |
| 2025-26 | 6,995 |
| 2026-27 (Forecast) | 7,345 |
| 2027-28 (Forecast) | 7,665 |
(5) The actual annual expenditure on government rent and rates of Rental Housing Operating Account in the past five financial years, as well as the rates concessions provided by the Government each year, are as follows:
| Financial Year | Actual Government rent and rates ($ million) |
Estimated Government rates concession# ($ million) |
| 2020-21 | 189 | 2,599 |
| 2021-22 | 253 | 2,376 |
| 2022-23 | 253 | 2,379 |
| 2023-24 | 1,531 | 1,176 |
| 2024-25 | 2,179* | 590 |
# The rates of public rental housing as assessed by Rating and Valuation Department are on a block/floor basis, the HA will pass on the rates concession to tenants according to the respective unit's share of internal floor area against the total rates of the whole domestic block. As the amount of rates concession is deducted from the rates payable of individual properties, the HA has not calculated the actual total amount of rates concession.
(6) Government non-reimbursable projects mainly include public transport interchanges (PTI) within development projects. Except individual projects which have been committed, the HA is no longer responsible for committing the expenditure related to PTIs after 2007.
The HA provides supervision services and construction of Government-funded projects in new development projects including welfare and community facilities such as schools, residential care homes for elderly, day care centres for the elderly, child care centres, etc.
In-house supervision and administration costs are mainly expenses of the relevant divisions of the HA responsible for supervision of construction projects, including personal emoluments, administrative costs, etc.
Note 1: The figure for 2024/25 financial year is not yet available.
Note 2: The construction cost for superstructure excludes costs of demolition, site formation, foundation, underground drainage, external works, other separate contracts for works such as utilities connection/road diversion, etc. These costs vary a lot from project to project subject to site constraints.
Note 3: The figure for 2024/25 financial year is not yet available.
Note 4: The figure for 2024/25 financial year is not yet available.
Note 5: As the estimate beyond 2025/26 financial year will be subject to the project implementation schedule and works progress, the estimated expenditures of 2026/27 and 2027/28 will be published in the related budgets of the Government in future.
Note 6: 2020/21 to 2023/24 are actual expenditures; 2024/25 expenditures refer to the Revised Estimate; and 2025/26 expenditures refer to the Estimate.
Note 7: Based on the forecast as at December 2024.
Note 8: The figures from 2020/21 to 2023/24 are actual expenditures. The figure of 2024/25 is the Revised Budget and 2025/26 is the Approved Budget.
Ends/Wednesday, April 30, 2025
Issued at HKT 17:15
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