Hong Kong likely to cut 'seven-year-old' compensation for redevelopment
Hong Kong's Development Bureau says the current compensation rate for property acquisitions, based on the value of a seven-year-old flat in the same district, will likely not remain at its current generous level. The Urban Renewal Authority also finds the mechanism unsustainable, as it hinders priva
The Hong Kong government has indicated that the current generous compensation rate offered to property owners in urban renewal projects is likely to be reduced. Speaking at a seminar marking the 25th anniversary of the Urban Renewal Authority (URA), Development Bureau Director Bernadette Ngan said the existing 'seven-year-old' cash acquisition mechanism will 'very likely not remain at its current generous level'.
Ngan revealed that the Development Bureau and the URA are jointly reviewing the financial and operational models for redevelopment, including the 'seven-year-old' compensation policy and the 'flat-for-flat' arrangement. She stated that the goal is to produce specific proposals and launch a public consultation in the first half of 2027.
As part of the review, the government has reserved three plots of land in the new development areas of Kwu Tung North and Fanling North for the URA to consider building new flats. These would serve as replacement units under a future 'flat-for-flat' scheme.
URA Chief Executive Michael Choi described the 'same-district, seven-year-old' acquisition mechanism as 'unsustainable'. He cited four recent URA acquisition projects where the offered price was generally 1.3 to 1.4 times higher than the market price. This, he said, makes it difficult for private developers to acquire old buildings because owners prefer to wait for the URA to make an offer, hindering private-sector participation in urban renewal.
Choi argued that Hong Kong's social, economic, and property market conditions are fundamentally different from those of 20 years ago. Given the aging of buildings, rising costs of urban renewal, and societal expectations for fair compensation, he said there is a need to 'pragmatically and openly' review whether the current acquisition system remains the most suitable for the city's present and future development needs.