The Government’s industrial buildings revitalisation scheme will expire in 2016. HT looks at whether the measure helps, specifically, artists and recreational and cultural activities to thrive and if, from their perspective, it should be extended or allowed to quietly pass.
The Government’s measure to encourage revitalisation in industrial buildings through waivers of land conversion fees will end in March 2016. There is no sign that it will be extended. Artists and recreation providers have moved into industrial buildings, some under fully legal conditions and some under murky circumstances. How artists, entrepreneurs and developers feel about the move to legalise their status depends on their viewpoint and experience. Some would applaud its extension, others its extinction.
In 2009, the Government promulgated a policy to optimise the use of industrial buildings which were left vacant after the economic transformation in the 70s and 80s. Property owners were allowed to change the land use without paying a premium. To date, there have been 110 approved applications. 16 cases allow for the use of “Place for Recreational, Sports and Culture” and had actually executed the special waivers. There are 16 other applications for non-industrial and non-residential uses which also allow for the activity types. Most have been exercised revitalising buildings for hotels and office use.
At first glance, the policy seems to be a blessing as places in industrial buildings or industrial-off ice buildings are cheaper to rent, and now their economic potential is available to other sectors.
BALL ROOM, which brought the idea of ‘pool soccer’ to Hong Kong in an industrial building in Kwun Tong, has recently come under the spotlight. Kase Kai is one of the founders of this innovative venture. HT also approached Manager Kshi Sharma from Ryze, another I-O building-based trampoline thriller. Both tends to agree that the policy offer an opportunity for young entrepreneurs to start their business.
“BALL ROOM wants to bring something new to Hong Kong and provide a new place for gathering instead of staying at home for dull on-line chats. It would be a shame that, without enough support, young people like us would not be able to run their businesses in industrial buildings,” Mr Kai says.
Meanwhile, both take a step back when the rent factor is taken into account. “Our neighbour had moved in for four or five years and the rent back then was around $15,000 per month. We are now paying two times the figure.” Mr Kai recalls.
“But the rent is still comparatively affordable business wise.”
END OF A CURSE…
Artists and musicians, who have had their workshops set up and activities organised in industrial buildings long before the scheme was implemented, were not as accommodative.
As the vast economic opportunities in these buildings opened up, market competition and a demand-driven inflation of rental prices seem unavoidable.
According to Chow Chun-fai, performance artist and chairman of Factory Artists Concern Group, many bands, performance artists and visual artists are settled in industrial zones in Kwun Tong, San Po Kong and Fo Tan respectively. Many have in fact been operating in a legal grey zone as the status of ‘Art Studio’ in these buildings was not officially recognised until recently. Some activities that would bring about human traffic, such as music concerts and art classes, would be considered illegal.
“We have long been lobbying the Government to address the needs of local artists and local cultural development. And the Government responded by offering a revitalisation scheme which has nothing to do with us. With no subsidy from the Government, our survival is now threatened by rocketing rents brought about by both the scheme and the Energising Kowloon East project. That being said, as many as 1,000 bands were located in Kwun Tong before the revitalisation. Many have been driven out since then.” Mr Chow says.
“In the first two years of the implementation [of the scheme], rents in industrial buildings had risen by more than 70% – the figure for high-end residential buildings over the same period was 40%. Our own findings certain years ago also suggested that the vacancy rate in commercial buildings was in fact even higher than those in industrial ones. The Government did offer the Jockey Club Creative Arts Centre (JCCAC) which now hosts about 140 artist groups. But the demand for studios was so high that applications exceeded the quota by five times.”
Mr Chow, who has his own studio in Fo Tan alongside some 400 artists, worries that if the situation continues, many artists may need to look farther north to Tuen Mun or Fanling. But many industrial blocks in these places have already become transit points for loads to the mainland.
…OR A BLESSING
On the other hand, developers would argue that the scheme has actually done more good to the society.
Darren Benson, Executive Director of leading commercial real estate services provider CBRE, tends to agree with the findings of Mr Chow.
“This [the scheme] has caused significant upwards rental pressure with in many cases rents doubling from the past five years. Good for property owners and investors, not so much for tenants,” Mr Benson notes.
“Many tenants have also faced forced relocation (six-months’ notice) owing to these revitalization activities.” While artists could opt for places designated by the Government like the JCCAC, some of them may benefit from private initiatives such as the Genesis in Wong Chuk Hang. The latter is a project by astute property developer Hip Shing Hong. Earlier this year, an old industrial building owned by the company was revitalised with 10% of its total area leased to Art Development Council, Tung Wah Hospital Group and Federation of Youth Groups with one-third the market rent.
In a written reply to HT, David Fong, Managing Director of Hip Shing Hong, believes that one should look at the positive economic outcomes brought about by the scheme. “This scheme minimized the initial cost by nil land premium payable to the Government for the conversion and speeded up the payback period …[this] allows developers like us to provide art development and start up opportunities for our next generation of youth at a discounted rate.” Mr Fong says.
If the policy is to be extended, Mr Fong suggests the Government can further relax restrictions of wholesale conversion and offer more partnership initiatives between NGOs and developers.
Wen Yau, a prominent behaviour artist in Hong Kong who based her studio not in an industrial building but her own flat in an outlying island, is not impressed by such Government- or developer-led approach.
“In the first two years of the implementation [of the scheme], rents in industrial buildings had risen by more than 70%”
Perhaps it is better for the Government not to intervene in local artist development. Whatever it had tried to do in the past tend to be misguided.” She says. “The JCCAC should have provided an undisturbed place for artists. Instead, it operates as if it is a zoo, wanting people to come and visit.”
Meanwhile, she points out that those artists in Fo Tan had placed themselves in a difficult position by accepting developers’ ‘sponsorship’ to organise cultural events. “While it is understandable, they [the artists] had attracted too much attention from property agencies and received too much benefit from developers.”
It is hoped that as the requiem of revitalisation finally arrives, the Government should review its cultural policy, if any, while the lobbying artists should know what they are fighting for.
Jimmy Leung Cheuk-fai, honorary fellow of the University of Hong Kong who is now working on a research concerning industrial land use changes in Hong Kong explains why the scheme is not a long term solution in the first place.
“Notwithstanding the complicated restrictions under the waiver, property owners would still need to pay the premium if they want to continue the changed land-use when these industrial buildings are to be rebuilt in the long run.”
Recreational businesses are likely to prevail, provided that they are adherent to their innovative entrepreneurship. As far as artists are concerned, revitalisation has been a story full of bitterness. This may be an inevitable confrontation between economic transformation and cultural development – or simply a result of bad government policymaking. Perhaps one day they will have their studios settled, like Wen Yau does, in outlying islands, calm and untroubled, until the universal problem of land shortage – as CY Leung termed it – finds its unlikely solution.
The Verdict: Nurture – while it lasted. For those that can handle the risk of operating in the grey zone, lower rents work. Legalising and working with supportive authorities has a price acceptable to some, but not others. Probably a “Nurture” and a good learning experience for civil servants and policy makers and the programme should be allowed to continue to some extent.