Leveraging the Northern Metropolis Development to Break the Deadlock in Urban Renewal
Leveraging the Northern Metropolis Development to Break the Deadlock in Urban Renewal
The source text is in Chinese. This English version is for reference only. In case of any discrepancy between this English version and the Chinese version, the Chinese version shall prevail.
The 2025 Policy Address advocates for a renewed approach to “urban renewal”, harnessing the opportunities presented by the Northern Metropolis development to provide additional land resources and overcome the traditional constraints associated with urban redevelopment. Key measures include allowing cross-district transfer of plot ratio, increasing the plot ratio for private redevelopment projects, and reserving land in the Northern Metropolis for the Urban Renewal Authority (URA) to build “flat for flat” units. How will these measures reshape the future of urban renewal?
Cross District Transfer of Plot Ratio — The First Step Towards Unlocking the Stalemate
The concept of “transfer of plot ratio” is not entirely new. In 2023, the Town Planning Board issued guidelines to pilot intra-district plot ratio transfer in Yau Ma Tei and Mong Kok, allowing the aggregation of remaining floor areas from fragmented lots onto larger sites to optimise planning layouts. Building on this, the new proposal proposes extending transfer rights across districts and into new development areas, thereby providing greater flexibility.
Nevertheless, implementation requires careful planning. Transferring plot ratios from fragmented sites in older districts to other established districts could increase planning burdens and potentially impede efforts to improve living environments. Moreover, developers may be hesitant to transfer plot ratios to less mature, emerging areas, which could limit the effectiveness of density alleviation measures.
Nevertheless, implementation requires careful planning. Transferring plot ratios from fragmented sites in older districts to other established districts could increase planning burdens and potentially impede efforts to improve living environments. Moreover, developers may be hesitant to transfer plot ratios to less mature, emerging areas, which could limit the effectiveness of density alleviation measures.In recent years, redevelopment projects has decelerated. Applications for compulsory land sale (“strong auction”) have sharply dropped since 2023, with only a single case recorded last year. Although recent amendments to the Land (Compulsory Sale for Redevelopment) Ordinance have alleviated some constraints, the residual plot ratios of older buildings continue to decline. Given prevailing market uncertainties and geopolitical factors, cross-district plot ratio transfers alone are insufficient to resolve land shortages. A paradigm shift is urgently needed to break through the current impasse.
Diverse Measures to Free Up Land Resources and Promote Sustainable Urban Renewal
The cross district transfer of plot ratio is only an initial step. Through leveraging the development opportunities of the Northern Metropolis, the 2025 Policy Address offers additional land resources, easing restrictions for both developers and the URA.
For developers, the 2025 Policy Address allows redevelopment projects in seven designated old districts to increase their plot ratio by 20 percent, which can be transferred to the Northern Metropolis or other areas, or redeemed in cash to offset land premium payments. Some view this as favouring developers and lacking focus on social well being. However, with the escalating issues surrounding aging buildings, new incentives are necessary to attract redevelopment initiatives. To ensure the effectiveness of this measure, the Government should establish clear guidelines to standardise the calculation of plot ratio increases and prevent excessively high density that would hinder environmental improvement.
At the same time, if old districts cannot accommodate an increased plot ratio, developers should be encouraged to transfer it to the Northern Metropolis. It is expected that many developers would prefer converting the plot ratio into a cash equivalent to offset premiums. The Government should adopt a “lower rights, lower use; higher rights, higher use” principle, setting a reasonable redemption period to prevent “coupon hoarding,” which may obstruct land development. If operational details can be agreed upon, the new measure can expedite both urban renewal and Northern Metropolis development, creating a win win outcome.
For the URA, the 2025 Policy Address announces that three sites will be reserved in the Northern Metropolis for building “flat for flat” units — a major reform from the original model. Previously, the “flat for flat” compensation was calculated based on the price of a “seven-year-old flat,” which did little to reduce URA’s redevelopment costs. Owners still had to pay the price difference for new flats, making the scheme unpopular. Most owners preferred receiving compensation equivalent to the value of a “seven-year-old flat,” then opting for cheaper second hand properties. As a result, their living conditions often remained unimproved, leaving them stuck in a “redevelopment compensation redevelopment” loop a waste of resources.
The new plan injects land resources into the URA, reducing the cost of rehousing units. Property owners can now directly exchange their old flats for new ones without paying the price difference, decoupling compensation from the “seven year old flat” mechanism. This truly fulfils the original intention of improving living conditions. The new measures provide more compensation options and greater fairness, laying the groundwork for future review of the compensation mechanism and offering long term significance.
While urban renewal and Northern Metropolis development currently progress at a cautious pace, their respective constraints also present substantial opportunities for development. The Government must take the lead in advancing infrastructure, expanding the capacity of new development areas, and alleviating pressure on older districts so as to improve liveability and achieve sustainable urban renewal.
The source text is in Chinese. This English version is for reference only. In case of any discrepancy between this English version and the Chinese version, the Chinese version shall prevail.
The 2025 Policy Address advocates for a renewed approach to “urban renewal”, harnessing the opportunities presented by the Northern Metropolis development to provide additional land resources and overcome the traditional constraints associated with urban redevelopment. Key measures include allowing cross-district transfer of plot ratio, increasing the plot ratio for private redevelopment projects, and reserving land in the Northern Metropolis for the Urban Renewal Authority (URA) to build “flat for flat” units. How will these measures reshape the future of urban renewal?
Cross District Transfer of Plot Ratio — The First Step Towards Unlocking the Stalemate
The concept of “transfer of plot ratio” is not entirely new. In 2023, the Town Planning Board issued guidelines to pilot intra-district plot ratio transfer in Yau Ma Tei and Mong Kok, allowing the aggregation of remaining floor areas from fragmented lots onto larger sites to optimise planning layouts. Building on this, the new proposal proposes extending transfer rights across districts and into new development areas, thereby providing greater flexibility.
Nevertheless, implementation requires careful planning. Transferring plot ratios from fragmented sites in older districts to other established districts could increase planning burdens and potentially impede efforts to improve living environments. Moreover, developers may be hesitant to transfer plot ratios to less mature, emerging areas, which could limit the effectiveness of density alleviation measures.
Nevertheless, implementation requires careful planning. Transferring plot ratios from fragmented sites in older districts to other established districts could increase planning burdens and potentially impede efforts to improve living environments. Moreover, developers may be hesitant to transfer plot ratios to less mature, emerging areas, which could limit the effectiveness of density alleviation measures.In recent years, redevelopment projects has decelerated. Applications for compulsory land sale (“strong auction”) have sharply dropped since 2023, with only a single case recorded last year. Although recent amendments to the Land (Compulsory Sale for Redevelopment) Ordinance have alleviated some constraints, the residual plot ratios of older buildings continue to decline. Given prevailing market uncertainties and geopolitical factors, cross-district plot ratio transfers alone are insufficient to resolve land shortages. A paradigm shift is urgently needed to break through the current impasse.
Diverse Measures to Free Up Land Resources and Promote Sustainable Urban Renewal
The cross district transfer of plot ratio is only an initial step. Through leveraging the development opportunities of the Northern Metropolis, the 2025 Policy Address offers additional land resources, easing restrictions for both developers and the URA.
For developers, the 2025 Policy Address allows redevelopment projects in seven designated old districts to increase their plot ratio by 20 percent, which can be transferred to the Northern Metropolis or other areas, or redeemed in cash to offset land premium payments. Some view this as favouring developers and lacking focus on social well being. However, with the escalating issues surrounding aging buildings, new incentives are necessary to attract redevelopment initiatives. To ensure the effectiveness of this measure, the Government should establish clear guidelines to standardise the calculation of plot ratio increases and prevent excessively high density that would hinder environmental improvement.
At the same time, if old districts cannot accommodate an increased plot ratio, developers should be encouraged to transfer it to the Northern Metropolis. It is expected that many developers would prefer converting the plot ratio into a cash equivalent to offset premiums. The Government should adopt a “lower rights, lower use; higher rights, higher use” principle, setting a reasonable redemption period to prevent “coupon hoarding,” which may obstruct land development. If operational details can be agreed upon, the new measure can expedite both urban renewal and Northern Metropolis development, creating a win win outcome.
For the URA, the 2025 Policy Address announces that three sites will be reserved in the Northern Metropolis for building “flat for flat” units — a major reform from the original model. Previously, the “flat for flat” compensation was calculated based on the price of a “seven-year-old flat,” which did little to reduce URA’s redevelopment costs. Owners still had to pay the price difference for new flats, making the scheme unpopular. Most owners preferred receiving compensation equivalent to the value of a “seven-year-old flat,” then opting for cheaper second hand properties. As a result, their living conditions often remained unimproved, leaving them stuck in a “redevelopment compensation redevelopment” loop a waste of resources.
The new plan injects land resources into the URA, reducing the cost of rehousing units. Property owners can now directly exchange their old flats for new ones without paying the price difference, decoupling compensation from the “seven year old flat” mechanism. This truly fulfils the original intention of improving living conditions. The new measures provide more compensation options and greater fairness, laying the groundwork for future review of the compensation mechanism and offering long term significance.
While urban renewal and Northern Metropolis development currently progress at a cautious pace, their respective constraints also present substantial opportunities for development. The Government must take the lead in advancing infrastructure, expanding the capacity of new development areas, and alleviating pressure on older districts so as to improve liveability and achieve sustainable urban renewal.
