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Hong Kong housing
Opinion
SCMP Editorial
SCMP Editorial

Editorial | Strike a balance when fixing Hong Kong’s urban renewal compensation

The Urban Renewal Authority should ease the concerns of affected owner-occupiers while putting its operations on a sounder footing

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A view of old housing in San Po Kong on September 19. For owner-occupiers affected by redevelopment, the Urban Renewal Authority’s current mechanism provides payouts equivalent to the market price of a comparable seven-year-old home in the same district. Photo: Edmond So
SCMP Editorial
The Urban Renewal Authority suffered a loss in 2024-25 of HK$2.72 billion, its third straight annual deficit after nearly a decade in the black. With no certainty of a return to profit in the financial year ending in March, the government’s immediate response has been to further raise the authority’s borrowing limit from HK$25 billion to HK$35 billion to finance redevelopment operations.

In the longer term, however, the administration and the cash-strapped authority see a more sustainable solution in reforming the compensation mechanism for owner-occupiers affected by redevelopment projects.

It remains to be seen how households will react to any proposed change. A review to be completed next year will include a public consultation. The current mechanism compensates owner-occupiers with payouts equivalent to the market price of a comparable seven-year-old home in the same district. Secretary for Development Bernadette Linn Hon-ho has said the mechanism is not sustainable in the long run. Some analysts have said cash payouts should be linked to the condition of homes. Ryan Ip Man-ki, vice-president of think tank Our Hong Kong Foundation, rightly said that while a review is needed, the authority should remain aware of its status as a statutory body and its objective of improving living conditions.
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Urban Renewal Authority managing director Donald Choi Wun-hing has said that if it continues using the current mechanism, “we face a ‘buy high, sell low’ situation, meaning we will lose money on nearly every single project”.

Taking two projects in Sai Ying Pun and To Kwa Wan as examples, he said the acquisition costs per square foot were more than HK$18,600 and HK$13,800 respectively. In both cases, this was more than double the average transaction price of old residential properties in these areas, according to independent surveyors. The mechanism not only increased the authority’s costs but also made owners wait for acquisition and discouraged private redevelopment efforts.

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The authority has promised a more comprehensive compensation mechanism to cut costs and provide better rehousing options. It will need to strike a balance to ease the concerns of affected owner-occupiers and put its operations on a sounder footing. One option is to consider homeowners’ maintenance efforts when assessing compensation.

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