Date
21 September 2017
Hong Kong's Urban Renewal Authority has faced difficulties in repossession of old buildings in districts like Kwun Tong. Photo: HKEJ
Hong Kong's Urban Renewal Authority has faced difficulties in repossession of old buildings in districts like Kwun Tong. Photo: HKEJ

Urban Renewal Authority comes under scrutiny after deficit

Hong Kong’s Urban Renewal Authority (URA) revealed Tuesday a deficit of about HK$2.3 billion (US$296.7 million) for the fiscal year ended March, the first such loss in five years.

In a working report submitted to the Legislative Council, the authority’s chairman Victor So Hing-who said the loss was mainly due to problems related to repossession of buildings for reconstruction projects at Hai Tan Street in Sham Shui Po district and ventures in the center of Kwun Tong town, Ming Pao Daily reported Wednesday.

The difficulties in repossession led to delays in bidding invitations last year and loss of income. Meanwhile, the authority also needed to set aside more provisions for those projects.

The deficit last year marked the URA’s first loss since the fiscal year ended March 2009, when it suffered red ink of HK$4.45 billion.

So said construction cost has risen to more than HK$4,000 per square foot from HK$2,000. However, as interested developers have become quite conservative in their bids, it could put the URA’s finances under pressure in the longer term. But for the moment, the situation is stable and no capital injection is necessary from the government, the official was quoted as saying.

Iris Tam Siu-ying, managing director of URA, said any plans for a bond issue to boost URA’s capital will depend on how fast revenues from the reconstruction projects can be booked.

According to the report, the authority had net assets of HK$23.9 billion as of end-March, but it expects expenditure over the next five years to amount to HK$33 billion, leaving a gap of HK$9.1 billion.

The Legislative Council is scheduled to discuss URA’s work on June 24. Lawmakers will, among other things, debate if there is a need to raise the application threshold for demand-led redevelopment projects.

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TL/AC/RC

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