The Hong Kong government has granted two parcels of urban land to the cashstrapped Urban Renewal Authority in a rare move to offer additional financial support for its redevelopment projects with a condition to review its financing model to ensure sustainability The sites in Hung Hom and Tseung Kwan O were approved by the governments top decisionmaking body in principle on Friday at a nominal premium of HK1000 US127 for 50 years The two sites will have to be rezoned for residential use in order for the selffinancing statutory authority to continue to take forward its commenced redevelopment projects in an orderly manner Redevelopment projects of a larger scale involve huge acquisition costs Coupled with the sluggish property market in recent years the URAs projects have been subject to the buyhighselllow situation thus affecting its cash flow Secretary for Development Bernadette Linn Honho said in the government announcement Granting land at a nominal land premium has long been one of the major government support measures for the URA Granting the two sites to the URA is along the same direction that helps the URA to fulfil its urban renewal mission The land grant includes several conditions The URA must collaborate with the government to refine its operating and financing model enabling it to undertake urban redevelopment in a financially sustainable manner irrespective of market ups and downs Furthermore the authority is mandated to utilise the two sites to enhance its financing and borrowing capacity This is intended to maintain the momentum of urban redevelopment projects over the next few years including making acquisition offers for the six redevelopment projects already under way Revenues from the sale of the two sites should also be used to reprioritise projects yet to commence in light of the URAs new financial position The authority is also expected to provide advice on how to step up building rehabilitation efforts The Hung Hom site on Bailey Street was initially earmarked for school development but the Education Bureau confirmed it could be released for other uses after a review The parcel has a proposed total gross floor area GFA of 68490 square metres 737220 sq ft with a plot ratio of 9 indicating a high development density The government said the move would optimise land use and enhance planning benefits for the area This includes accommodating community facilities to address local shortfalls improving connectivity and amalgamating the adjacent Hoi Sum Park to provide public open space The lot in Tseung Kwan O was originally reserved for public housing development with the government stressing that the grant would not affect the overall public housing supply for the current 10year period citing sufficient supply and the reprioritisation of other projects The parcel has a proposed total GFA of about 713700 square metres with a plot ratio of 78 In 2017 the government granted the site of the former Central Market to the authority for revitalisation for 21 years at a nominal land premium this was opened to the public from August 2021 The authority faces increasing challenges with the number of private buildings aged 50 or above projected to rise from 8700 in 2020 to around 13900 in 2030 according to the Buildings Department But the recent downturn in Hong Kongs property market led to the URA recording a deficit of HK35 billion in the 202223 financial year its first loss in almost a decade This was followed by a loss of HK39 billion in 202324 comprising a HK31 billion provision for devalued past projects and an operational deficit of HK830 million To mitigate these financial pressures the authority secured a HK13 billion bank loan in January and issued bonds including HK12 billion in senior bonds to raise funds It also engaged with investors in Singapore and Macau last year to share details of its major projects Last month the government appointed Donald Choi Wunhing former CEO of Chinachem Group and a veteran property specialist as the authoritys managing director for a threeyear term starting from June 15