Causeway Bay Rezonings Raise Questions that Need Answers

September 29, 2010 SCMP

The rezoning this month of sites on either side of Pak Sha Road in Causeway Bay from the flexible “Commercial/Residential” use to the more restrictive “Commercial (2)” raises some interesting questions.

The rezoning, in an outline zoning plan published by the Town Planning Board on September 17, together with associated restrictions and requirements, brings up issues relating to the bigger picture of development economics and property rights and values in Hong Kong.

For instance, should the town planning process take into account land economic impact studies in the future? The rezoning will impose the following on the sites:

A height restriction of 30 metres above the Hong Kong Principal Datum line (set at 1.23 metres below mean sea level);

A comprehensive redevelopment requirement, to be supported by an urban design plan and technical assessments, including in particular traffic impact and visual impact assessments;

A building set-back requirement of 1.5 metres for various lots along Lee Garden Road and Lan Fong Road;

A requirement for town planning approval for residential use upon redevelopment.

The relevant authority may or may not be aware that the imposition of the above restrictions and requirements virtually rips off the redevelopment potential of the buildings on both sides of the road.

The limitation of building height to under 30 metres above HKPD has been imposed with regard to the existing low-rise and special character of the local area. The existing buildings are between five and six storeys high and they are similar in terms of external appearance.

The ground-floor units are used for shops and upper floors mostly for residential purposes.

Despite the relevant government leases being virtually unrestricted, the subject area and some other nearby street blocks were part of the first private building scheme in Hong Kong and are subject to certain restrictive covenants introduced in early assignments made by the Lee Hysan family company, which was then the owner of the large plot of land in the Lee Garden area.

The imposition of the building height limitation of 30 metres above HKPD means the potential for high-density redevelopment is taken away, as the plot ratio control under the Buildings Ordinance and Building Regulations hinges on the height of the building.

The effective height restriction (after taking into account the street level of the ground floor) would mean a much-reduced maximum plot ratio for a non-domestic building, say, eight times against a plot ratio of 15 times for neighbouring areas.

If an owner wishes to achieve such a reduced plot ratio, and assuming other legal and technical constraints can be overcome, a large part of his redevelopment would need to be underground.

Piecemeal redevelopment and/or refurbishment of buildings has been seen in the area over the years. These appear to comply with the relevant restrictive covenants in the assignments of the lots, namely not to erect any buildings other than domestic buildings used for private dwelling purpose except for the ground floors, which can be used for commercial purposes.

Under the new zoning, domestic use in the event of redevelopment would require planning approval from the Town Planning Board. Contrastingly, the redevelopment into other uses like shops and/or hotel on upper floors, as envisaged in the town plan, would require the removal and/or modification of the existing restrictive covenants.

The existing buildings in the area are mostly held under multiple ownership. The requirement of a comprehensive redevelopment to be supported by an urban design plan and technical assessments make redevelopment very challenging, as illustrated clearly by the sluggish redevelopment processes in Comprehensive Development Area (CDA) zones in the urban area, including sites with just a few owners, not to mention multiple ownership situations.

Set-backs on narrow streets would improve the pedestrian and vehicular traffic. In nearby Russell Street, we have seen voluntary set-backs by building owners upon redevelopment which have been justified economically by the plot ratio compensation under the Buildings Ordinance and consequently the improved pedestrian traffic and retail shop values.

What would drive the redevelopment of the two lots at the junction of Kai Chiu Road, Lee Garden Road and Pak Sha Road then?

These two lots have a 1.5-metre building set-back upon redevelopment along Lee Garden Road facing Russell Street. This would mean valuable ground-floor space is taken away in one of the prime retail areas of Causeway Bay and it would not be compensated by plot ratio gains or other means as the town plan shows at the moment.

Who would take care of the interests of the subject owners then? Would that make the negotiation among owners for an agreement of comprehensive redevelopment even more difficult?

Would the community benefit if some of the buildings are due for redevelopment for, say, structural concerns, but the required comprehensive redevelopment scheme is not in place yet?

The Town Planning Board should provide further light on this.

Lau Chun-kong is an international director of Jones Lang LaSalle Hong Kong