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Our Ref : 26/WKC/022
17 January 2000

Mr Augustine Ng
Assistant Director of Planning
Planning Department
16/F North Point Government Offices
333 Java Road North Point
Hong Kong

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Dear Augustine

Comments on the "Business Zone" concept
and the Guidelines for Rezoning of Industrial Land

Thank you for drawing our attention to the government's proposal to revise the planning framework for the reservation and provision of industrial land and the introduction of a new "Business Zone". The latter, we understand, is designed to accommodate "clean" industrial, general office and commercial uses. We have consulted our members, in particular, our Real Estate Services Committee, and would like to take this opportunity to briefly comment on the proposed zoning and guidelines as follows.

In general, we welcome the government's initiative to address the need for a more flexible zoning for surplus industrial sites, particularly as the distinction between industrial and office uses is becoming blurred. There is potentially a surplus of over 4,000,000 sq. meters of industrial floor space - about 66 acres of industrial land - and it would be prudent to turn these sites to other suitable uses.

In considering the merits of a new "Business" zone, however, we are of the view that the zoning in itself would not necessarily provide the level of flexibility required to encourage re-development.

Firstly, the flexibility in zoning must be accompanied by a similarly more flexible attitude at the Lands Department, if the purpose of the zoning is to be achieved. Hitherto Lands Department has sought to charge significant premiums for a change from industrial to industrial/office. If the new "Business" zone were to also attract a financial levy in the form of higher premium, then the incentive for re-development would be much reduced. In other words, a lessee seeking to use his premises for "Business" purposes should be charged only an empirical premium, notwithstanding the strict interpretation of the user clause of the Government lease.

Secondly, for many districts, the new "Business" zoning may go little further than recognizing the status quo to reflect the changing face of the "industrial" sector of Hong Kong. If redevelopment were to be achieved, a more aggressive zoning programme should be pursued and whenever possible, a specific zoning rather than Comprehensive Development Area (CDA) should be allocated to the surplus sites; so as to give certainty and to encourage the private sector to take the initiative. Zoning such as CDA or Residential Group E should only be adopted in particularly difficult cases of site assembly or interface with established industrial activities.

Finally, the new zoning should also be considered in the context of the government's overall Urban Renewal Strategy, as many of the obsolete industrial areas fall within the urban catchment. If redevelopment is hampered by extensive fragmented ownership or lack of infrastructure and other facilities, the Urban Renewal Authority should be involved, given its ultimate powers of compulsory acquisition.

I hope you will find the above comments useful.

Yours sincerely

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Dr Eden Woon
Director