CHAPTER XI
THE ECONOMICS OF MULTI-STOREY RESETTLEMENT
131. The successful 1954 experiment of constructing six- storey buildings at Shek Kip Mei led to the policy decision that the great majority of squatters should in future be resettled in blocks of this type, but of seven storeys. It was appreciated that the capital cost would be very considerable, quite apart from the amount of land which would be needed. The total amount so far expended on these buildings now amounts to over $31 million.
132. This decision to use public funds on a large scale for the rehousing of squatters was taken on the basis that the rent to be charged should not only cover all annual recurrent expenditure but should enable Government to recover its capital expenditure in 40 years with interest at 31%, including a reduced figure for the average value of the land in its unformed state, taken at $10 a square foot.
133. The annual recurrent expenditure to be recovered includes all items. The most important are the cost of administrative and sanitation staff; the cost of the electricity supply to staircases, passages, latrines, washing spaces and bathrooms; and the cost of maintenance of the buildings.
134. The unit chosen for the purpose of the rent calculation was a seven-storey block containing 432 rentable rooms, certain rooms being set aside as communal bathrooms and for administrative purposes. The figures were worked out as follows:
I.
CAPITAL COST OF ONE BLOCK OF 432 RENTABLE ROOMS.
Value of land (23,000 sq. ft. @ $10 a foot)
H.K. $
230,000
Cost of construction (including an element for average
cost of site-formation and piling)
780,000
Add 2% of construction cost to cover P.W.D. supervision,
etc.
15,600
Overall completed cost of one block
$ 1,025,600
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