Urban Renewal Authority 2018-19 Annual Report

70 MANAGEMENT DISCUSSION AND ANALYSIS Current Position Since its establishment in 2001 and up until 30 June 2019, the URA had commenced and implemented 62 projects comprising 59 redevelopment projects, two preservation projects and one revitalisation project. A further of six redevelopment projects were undertaken in association with the Hong Kong Housing Society (HKHS). Of these 68 projects, 24 have been completed and the remaining are at various stages of implementation. The URA’s notable achievements can be measured through the scale of urban decay that has been successfully addressed, the consequent benefits to the affected people, the contributions to new flat supply and the new facilities created for communities, as highlighted below: At the time of its establishment, the URA also took over 10 projects which were under implementation by its predecessor, the Land Development Corporation. All of these have now been completed. Challenges and Opportunities The property market is now in the 16 th year of an upward trend, which began in 2003 and has seen prices for all classes of accommodation in the private domestic market rise about six-fold (see Figure 1). This price increase poses a growing risk to the value of the URA’s acquired building stock in the event of a market downturn. The risk is further compounded as the URA is obliged to bear higher development costs by acquiring properties under the “7-year rule” and is subject to ex- gratia payments markedly higher than those incurred by private sector developers. The URA is also obliged to commence acquisition as soon as possible after authorisation by the Secretary for Development or approval by Executive Council. This exacerbates the risk of “buy high, sell low” as URA does not have the flexibility to slow the acquisition process under unfavourable market conditions. The URA mitigates this risk by targeting the clearance and tender of projects which can help reduce the value and market exposure of properties under development. The URA has cleared and tendered one and three Run-down urban area improved 18.7 hectares Dilapidated buildings redeveloped 1,394 building blocks Rehoused/compensated households 13,600 Population benefiting from projects 30,900 New domestic gross floor area 1,023,000 square metres New flats 19,950 New commercial gross floor area 423,000 square metres New GIC floor space 54,000 square metres New open space 28,000 square metres 0 50 100 150 200 250 300 350 400 450 Price Index Year Figure 2: Quarterly Construction Tender Price Index 2001 - 2019* Figure 1: Private Domestic Price Index Dec 2001  - Jun 2019 - All Classes* 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 *HKSAR Government, Rating & Valuation Department, Hong Kong Property Review Monthly Supplement, August 2019.