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Answer:
Mr President,
A large majority of commercial premises in Housing Authority (HA) shopping centres are let through open tender. There is no fixed ratio for the number of premises which must be let in a particular way. In the last two years, about 20% of commercial premises were let through negotiation.
Use of open tender or negotiation depends on the nature and size of the business to be operated. For example, in order to attract major retail companies to open outlets in public housing estates, the HA may put up a small number of commercial premises for letting through negotiation. This will enable the HA to exercise flexibility in determining the terms of each tenancy, such as length and rent. Tenants selected in this way are generally popular chain-stores which are welcomed by local residents as well as other retailers in the same shopping centre because they enhance the attractiveness and increase the patronage of the centre. This method of letting commercial space is commonly adopted in the private sector.
The HA's criteria for letting commercial premises through negotiation are confined to cases where -
(a)
(b)
(c)
(d)
the space to be leased exceeds 250 m2 and the type of trade can attract more customers to the shopping centre, or can provide a desirable facility for residents; or
the premises to be let have failed to attract suitable bidders in more than two open tender exercises; or
an attraction is offered by the brand name of the company under which the premises are to be operated, or by the tenant's ability to develop business through substantial promotional activities, both of which will enhance the overall attractiveness of the shopping centre; or
where a sitting tenant has demonstrated the capability for expansion.
A Letting Panel, chaired by the Chairman of the HA's Commercial Properties Committee, oversees the arrangements for letting commercial properties by negotiation. The leasing procedures and guidelines are also subject to periodic review by the Independent Commission Against Corruption.
End