While most details are still up in the air concerning urban renewal, the consensus is that the threshold for ownership approval for redevelopment should be lowered
With the city slated to conduct a public consultation by year-end at the earliest on the details of the implementation and regime of urban renewal, the current divided discussions over this beleaguered topic ominously foreshadow the challenges ahead.
While some real estate figures warn there might not be enough incentive for property owners in old neighbourhood districts and developers to progress urban renewalprojects, some insist the projects should uphold the principle of improving the living quality of residents rather than becoming vehicles for lucrative profits — but there is at least one consensus; that the threshold of ownership approval for redevelopment should be lowered, as stated before.
In August, Secretary for Transport and Public Works Raimundo Arrais do Rosário announced a third-party consultancy firm commissioned by the authorities had completed preliminary research on urban renewal, paving the way for the Administration to conduct a consultative exercise as soon as year-end. But he did notreveal details of the report, like whether the ownership approval required for redevelopment previously deliberated upon by the Urban Renewal Committee was to be upheld.
Inaugurated in 2016, the committee – a government-appointed council advising the authorities on urban renewal policies – had previously reached a consensus on various issues; namely, that the threshold of ownership approval for redevelopment of buildings of 30-40 years of age would be lowered to 90 per cent from full ownership now. The percentage would be lowered to 85 per cent for buildings aged 40 years or more, and in the case of major public interests or the buildings being demolished the approval ratio could be changed to as low as 80 per cent.
No Hong Kong model
But the government, out of the blue, commissioned the third-party consultancy firm to conduct research on the matter last year, putting the consensus of the committee in doubt.
What makes this committee consensus further open to question are the latest remarks by Chief Executive-elect Ho Iat Seng. During his run for the city’s top job in August the former Legislative Assembly president said urban renewal would be one of the most challenging tasks for his five-year term starting in December. He underscored worries of lowering the ownership approval threshold and a regime for compulsory sale for redevelopment possibly leading to “many judicial disputes and controversies”.
In 1999, Hong Kong introduced a regime for compulsory sale for redevelopment, in which any person with 80-90 per cent of undivided shares in a lot could apply for the forced sale of all undivided shares for the purpose of redevelopment. But this has been criticised in the Asian financial centre as driving out low-income residents and merchants rather than improving the living standards of residents in old districts. Meanwhile, private property developers have taken advantage of the rules to force out homeowners and redevelop lots for lucrative profits.
Mr. Ho has emphasised that the city would not follow the urban renewal model of Hong Kong, adding the government might help planning and paying in advance the redevelopment of ageing buildings once owners reach consensus, provide temporary accommodation for owners during redevelopment, and only ask owners to repay redevelopment costs at a later stage.
“We should take a first step, and [the scheme] could be adjusted later for further improvement; otherwise, we will just sit here for another 10-plus years discussing this topic again,” said Mr. Ho, adding the public should actively voice their opinions on urban renewal during the future public consultation exercise.
Sin Fong predicament
The redevelopment of ageing buildings in old districts first appeared on the government’s agenda in 2004, with the dereliction of seven aging blocks in Iao Hon a pilot area. However, there has been no material progress over the past decade and a half with a redevelopment draft bill once proposed in 2011 but then scrapped two years later.
Meantime, urban renewal appears to be more urgent than ever, with the number of ancient buildings growing. According to the latest official data, there are more than 4,838 buildings – residential, commercial, industrial and others – aged 30 years or over as of this year.
Chan Tak Seng, president of the District Development Promotion Association, hascautioned that the ownership approval for redevelopment must be lowered from the current level of 100 per cent to 80-90 per cent for the success of urban renewal projects. Citing the redevelopment of Sin Fong Garden, he explained it took time to acquire the support of all owners: Sin Fong was embroiled in a safety hazard due to structural defects and all occupants had to be evacuated in 2012, with redevelopment only undertaken six years later.
“Only the owners of two shops did not agree with the reconstruction plan originally,and it took several years for all to finally green light the plan, with the help of many heavyweights from the local political and business scene,” said Mr. Chan. “The ownership of ageing buildings in Macau is also very complex, with some owners not living in the city and the whereabouts of some remaining unknown. Thus, there should be legal tools to resolve any standstills among owners over redevelopment.”
He is also concerned that should the government take the lead in urban renewal projects property developers might complain that the mechanism of private housingwould be negatively impacted.
Incentives
Macau property investor and developer William Kuan Vai Lam sided with Mr. Chan on lowering required ownership approval, adding there should be more incentives for flat owners and developers to take on the projects.
“Should there be room for enhancing the plot ratio for old buildings zoned for redevelopment, requests should be considered in accordance with the city’s urban master plan,” he said. “Without any incentives like enhancing the plot ratio, it’s difficult to convince property owners to rebuild their buildings as they have to [be able to]afford to pay at least some redevelopment costs, let alone developers.”
Peter Lam Kam Seng, chairman of Macau Urban Renewal Ltd., a public firm responsible for co-ordinating and promoting works related to urban renewal, said recently thatthere would be no increase in density and the number of flats for urban renewal projects after redevelopment.
“For example, if there were 1,000 flats before redevelopment, there would also only be 1,000 flats after reconstruction,” he said. “If there were three towers before redevelopment, there might just be two higher towers after reconstruction with more public facilities like car parks and green areas.”
Another property industry source, speaking on condition of anonymity, is concerned about the effectiveness of the urban renewal regime based upon the current ideas suggested by Administration officials and Macau Urban Renewal Ltd.
“There are surely controversies about the forced sale regime in Hong Kong, but are there any better options to settle the differences among owners?” the real estate industry figure asked. “It might also take time to settle differences via judicial means or arbitration, stalling the progress of urban renewal projects.”
Acknowledging public trepidation about urban renewal projects becoming profiteering vehicles for developers, the source stated: “But without the active involvement of developers, I don’t expect many renewal projects will get off the ground.”
Quality of life
Provided there are better public facilities after reconstruction and the professional consultancy services offered by Macau Urban Renewal Ltd., such as assistance in formulating the construction plan, there are “enough incentives” for owners to redevelop their buildings albeit they might have to find the reconstruction costs, sayspublic commentator and former Urban Renewal Committee member Ron Lam U Tou.
“Based upon data from the latest public housing projects, the construction cost in the city now is about MOP1,600 per square foot, meaning the total cost of a 500 square foot flat averages less than MOP1 million,” he added.
From his perspective, the key to urban renewal is also a lower ownership approval threshold to kick-start the projects.
“I agree that the rights of every property owner should be safeguarded, but there should be a better balance in the rights between the majority and the minority,” the political commentator noted. While he agrees the forced sale regime in Hong Kong should not be replicated in Macau he believes a mandatory arbitration process could help settle the differences arising from the redevelopment process.
“But one thing we should bear in mind is that urban renewal is to help improve the living quality of residents; it should not become a property vehicle for making profits,” he concluded.
90 pct of Pearl Horizon buyers apply for replacement housing
About 90 per cent of buyers of the failed high-end residential project Pearl Horizon have applied for replacement flats, announced Macau Urban Renewal Ltd. in its latest media briefing.
The public firm said it has received 1,932 applications from 2,128 eligible buyers of Pearl Horizon for the replacement units to be built on the plot of the failed initial project.
Of the applications, some 1,716 have been accepted while most of the remainder were suspended due to ongoing legal disputes between the buyers and government, said the company. The replacement units should be completed within three years of the start of construction, the plan for which is now being prepared, the company added.
The Macau Administration voided the Pearl Horizon land concession of the project developed by Polytex – a local arm of Hong Kong-listed developer Polytec – in January 2016, as the developer was unable to complete the project within the 25-year concession.
Although the developer appealed to the local courts, last year the Court of Final Appeal upheld the government’s decision to reclaim the land. The Administration then introduced replacement housing legislation and pledged to develop replacement units on the plot for Pearl Horizon buyers, who could purchase them at the same price as their previous contracts with Polytex.
