Following is a question by the Hon Jimmy Ng and a written reply by the Secretary for Development, Ms Bernadette Linn, in the Legislative Council today (May 7):

Question:

     The 2024 Policy Address proposed to extend an array of measures to revitalise industrial buildings (IBs) until the end of 2027, including continuing to allow an increase in plot ratio of up to 20 per cent for IB redevelopment projects and exempting the restriction that 10 per cent of the gross floor area of IBs constructed before 1987 (pre-1987 IBs) be used for purposes designated by the Government after conversion. Moreover, at the end of 2023, the Government has extended the arrangement for charging land premium at standard rates for lease modifications to IBs for special industrial use. In this connection, will the Government inform this Council:

(1) of the number of applications under the various IB revitalisation measures received, approved and rejected by the Government in the past three years, with a breakdown by individual measure; the average time required to vet and approve applications under the various IB revitalisation measures;

(2) given that the authorities currently allow an increase in plot ratio of up to 20 per cent for redevelopment projects of pre-1987 IBs, whether it will consider extending the scope of the relevant arrangement to include IBs constructed after 1987 (post-1987 IBs); if so, of the details; if not, the reasons for that;

(3) of the number of applications received, approved and rejected by the Government to date under the arrangement for charging land premium at standard rates in respect of lease modifications involving IBs for special industrial use; whether it will study extending the scope of the arrangement to include post-1987 IBs; if so, of the details; if not, the reasons for that;

(4) as the Government indicated last year that it would consider approving individual units on the lower floors of IBs to be used as eating places, whether any such cases have been approved to date; if so, of the details of such cases; whether it will consider allowing lower floor units in IBs that meet the relevant safety standards to be used for more purposes, e.g. retail and exhibition use; if so, of the details; if not, the reasons for that;

(5) given that the Development Blueprint for Hong Kong's Tourism Industry 2.0 proposes to encourage the trade to develop tourism products featuring the elements of Made in Hong Kong industries, whether the Government will introduce further IB revitalisation measures to support the aforesaid work, e.g. whether it will consider relaxing the policy on waivers of land lease restrictions to allow enterprises in the industrial tourism sector to operate in individual units within existing IBs without having to separately apply for waivers of land lease restrictions or pay the waiver fee; if so, of the details; if not, the reasons for that;

(6) whether it will study extending the scope of the Youth Hostel Scheme and the student hostel pilot scheme to include IBs after wholesale conversion; if so, of the details; if not, the reasons for that; and

(7) whether it will regularise all existing measures to revitalise IBs; if so, of the details; if not, the reasons for that?

Reply:

President,

     The Government reactivated the Revitalisation Scheme for Industrial Buildings (Revitalisation Scheme) in 2018 which encourages redevelopment or wholesale conversion of aged industrial buildings (IB), mainly to make more effective use of the sites on which IBs are situated or the existing IBs per se to optimise the use of precious land resources, and to address fire safety and unauthorised use issues of aged IBs more effectively.

     ​My reply to various parts of the question is as follows:

(1) On the redevelopment of IBs, the prevailing policy allows relaxation of the maximum permitted non-domestic plot ratio up to 20 per cent to provide incentives to private owners to redevelop IBs constructed before 1987 (pre-1987 IBs). In the past three years (viz. April 2022 to end-March 2025), excluding applications withdrawn by applicants, the Town Planning Board (TPB) received a total of 11 applications for relaxation of plot ratio for redevelopment of IBs, among which nine cases (involving eight sites) were approved, and the remaining two cases are being processed. Planning applications submitted in accordance with section 16 of the Town Planning Ordinance are to be considered by the TPB within two months upon receipt. Among the nine approved planning applications, six of them have applications made to the Lands Department (LandsD) for lease modification which shall be subject to payment of premium, among which two cases have been withdrawn by the applicants and four cases have been approved and are currently under land premium assessment. The owners of these four applications opted for conventional premium assessment (viz. not opting for standard rates arrangement for charging land premium). As for the remaining three cases among the aforesaid nine approved planning applications, the LandsD has yet to receive relevant application for lease modification.

     For wholesale conversion of IBs, the prevailing policy exempts waiver fees so as to encourage private owners to convert IBs aged 15 years or above in "Commercial", "Other Specified Uses" annotated "Business" and "Industrial" zones for uses permitted under the relevant Outline Zoning Plans. The condition is that for IBs constructed in or after 1987, not less than 10 per cent of the converted floor space must be used for purposes designated by the Government (such as arts and cultural studios, incubators for innovation and technology start-ups). Such requirement on 10 per cent floor space does not apply to pre-1987 IBs. In the past three years (viz. April 2022 to end-March 2025), excluding applications withdrawn by applicants, the LandsD received a total of two applications for wholesale conversion of IBs, with one case approved and the other one being processed. The processing time for the approved case was around 20 months. The relatively long time taken was mainly due to the negotiations regarding the specified use and the related arrangement for the 10 per cent designated floor space when the owner submitted the waiver application to the LandsD. It is worth noting that, under the first round of Revitalisation Scheme launched by the Government from 2010 to 2016, around 110 applications for wholesale conversion were received. We do not rule out the possibility that a significant portion of the IBs suitable for wholesale conversion in the market may have already undergone conversion works. After the Revitalisation Scheme was reactivated in 2018, the number of applications received and cases approved for redevelopment of IBs have been significantly higher than that of the first round, reflecting greater market interest in the redevelopment measure in the current round.

(2) The measure for encouraging redevelopment of IBs as mentioned in part (1) above targets pre-1987 IBs situated outside "Residential" zones in main urban areas and new towns. We have designated 1987 as the dividing line because the fire safety installations and equipment of pre-1987 IBs may not comply with the Code of Practice for Minimum Fire Service Installations and Equipment as revised by the Fire Services Department (FSD) in 1987, including the requirement of installing automatic sprinkler systems. From the perspective of public safety, there is a need to provide policy incentives to encourage foremost the redevelopment of pre-1987 IBs so as to meet modern standards of fire safety installation. As for post-1987 IBs, the Government currently has no plan to extend the measure concerning redevelopment to these IBs. Nevertheless, if owners wish to redevelop these IBs for non-industrial uses, they may still submit a planning application to the TPB for increasing the plot ratio. The TPB will consider the applications from a planning perspective based on the actual circumstances of each case.

(3) The Government provides a regularised standard rates arrangement for charging land premium for the redevelopment of pre-1987 IBs as an alternative to the conventional premium assessment mechanism. The policy objective is to continuously incentivise the redevelopment of aged IBs, giving IB owners greater certainty in planning redevelopment. This encourages the redevelopment of aged IBs for optimising land utilisation, expediting urban renewal and revitalisation of IBs to meet the current needs of the society.

     The Government announced in December 2023 to expand the coverage of the standard rates arrangement for charging land premium to cover redevelopment of pre-1987 IBs for special industrial uses (e.g. leather tanning, garment manufacturing and food production). Regarding IBs for special industrial uses, in the past three years (viz. April 2022 to end-March 2025), the LandsD has received a total of four applications for lease modification for redevelopment of such pre-1987 IBs, among which one case is currently under land premium assessment with the applicant having opted for conventional premium assessment. The remaining three cases are being processed.

     The policy objective as mentioned in part (2) above, viz. to encourage redevelopment of pre-1987 IBs, also applies to the lease modification of IBs for special industrial uses. Therefore, we currently have no plan to extend the standard rates arrangement for charging premium to post-1987 IBs for special industrial uses.

     The Government will continue to closely monitor the implementation of standard rates arrangement for charging premium for redevelopment of IBs and make adjustments as and when necessary. The latest enhancement measure was rolled out last month, which separated the standard rates for the two uses under the previous "commercial/modern industrial" use after lease modification, into "modern industrial" and "commercial" uses respectively. Such separation can better reflect the land value of redeveloped IBs intended for modern industrial use and cope with the increasing demand for modern industrial sites.

(4) Having balanced the need for public safety and optimisation of IB floor space, the Government would also exercise discretion in allowing the co-existence of industrial and non-industrial uses. Under the Revitalisation Scheme, apart from the measures mentioned in part (1) above, the Government has since 2018 relaxed the waiver application policy for IBs with fragmented ownership and yet to undergo wholesale conversion, so as to allow individual units of existing IBs to be used for specified non-industrial uses other than those permitted under the relevant land leases. Specifically, owner of individual IB units may use the units, without having to apply for a short-term waiver from the LandsD and pay waiver fees, for five specified non-industrial uses, which include "Art Studio", "Office (Design and Media Production)", "Office (Audio-visual Recording Studio)", "Office (used by "specific creative industries" including design and media production companies, printing and publishing, film companies and industry organisations related to the film industry), as well as "Research, Design and Development Centre".

     As IBs are supposed to be used for industrial purposes, and the risk of fire and other accidents involved in these industrial purposes is relatively higher, in view of public safety, the uses covered by the above relaxation measure do not include any uses or activities that directly provide services or goods to attract public visits. If IB owners intend to convert some units for industrial tourism uses (e.g. opening up production line for the public and tourists to visit), we will consult the FSD and relevant departments when we receive the waiver applications.

     If there is a buffer floor within an IB which completely separates the lower floors from the upper portion with industrial uses, an owner may convert the premises on the lowest three floors of the IB to other non-industrial uses, including shops and services, restaurants, or arts and cultural activities, subject to payment of waiver fees and compliance with planning and other relevant requirements. Earlier, we have also broadened the permissible uses of buffer floors to cover "telecommunications exchange centres" and "computer/data processing centres". In the past three years (viz. April 2022 to end-March 2025), the LandsD has not received any waiver application for partial conversion of the lowest three floors of IBs (including for eating place use). 

(5) The Development Blueprint for Hong Kong's Tourism Industry 2.0 promulgated by the Culture, Sports and Tourism Bureau in December 2024 puts forward four major development strategies covering product development, visitor source expansion, technological innovation and service enhancement, as well as 133 measures to be implemented between 2025 and 2029 to promote development, including promoting the development of tourism products related to "Made in Hong Kong" industrial elements. The Development Bureau (DEVB) will provide facilitation as and when necessary. 

(6) As announced in the 2024 Policy Address, in order to strengthen the position of Hong Kong as an international hub for post-secondary education, the Education Bureau and the DEVB will launch a scheme in the first half of 2025 to streamline the processing of approvals in respect of planning, land administration and approval of building plans, so as to encourage the market to convert hotels and other commercial buildings into student hostels on a self-financing and privately-funded basis, thereby increasing the supply of student hostels. This scheme will apply to commercial buildings which are wholesale-converted from aged IBs.

     On the other hand, in response to young people's aspirations of having their own living space, the Home and Youth Affairs Bureau (HYAB) will, as announced in the 2022 Policy Address and the Youth Development Blueprint, expand the Youth Hostel Scheme (YHS) and continue fully funding non-governmental organisations (NGOs) to construct youth hostels on under-utilised sites, and subsidise NGOs to rent suitable hotels and guesthouses for converting into youth hostels. The HYAB will also explore with the DEVB the launching of a site under the Land Sale Programme whereby developers will be required to reserve a certain number of flats to support the YHS on a pilot basis. So far, seven youth hostels have been launched for operation under the YHS, and the number of hostel places has increased substantially from 80 at the commencement of the current-term Government to about 3 000 at present. 

(7) To continue encouraging redevelopment and wholesale conversion of aged IBs, the Government announced in the 2024 Policy Address the extension of the time-limited revitalisation measures for IBs up to December 2027, with enhancement of the measure on wholesale conversion. We will review the effectiveness of the Revitalisation Scheme in transforming industrial areas, and make reference to the results of a territory-wide Area Assessment on industrial land to be carried out by the Planning Department, with a view to announcing the way forward for the revitalisation measures before expiry in end-2027.

Ends/Wednesday, May 7, 2025
Issued at HKT 16:55

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