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Wednesday, May 10, 1972

When the market is overheated, and land values unnaturally high, so

that the same piece of land might be valued at $150,000, the appropriate rate

should be 1%, or again, roughly $1,575.

In a depressed market, like that of 1967, when the same piece of

land might be valued at $70,000, the appropriate rate should be 2%, or

again, roughly $1,900.

Again using a 5% interest rate, the annual payments for a 24 year

Crown lease should be something like 2% of the premium in a normal market,

per year, he said.

The premium on a 24 year lease is less than one for a 75 year lease,

probably about two thirds. The same considerations about an overheated market

and a depressed market ought to be applied to them,

Sites

Speaking of the category of sites on which pre-war buildings stand,

with the rents controlled at the low levels allowed by the Landlord and

Tenant Ordinance, Mr. Cheung said they require very special treatment.

·

"The Government, which in the public interest severely limits the rents,

ought to increase the Crown rents only by an amount commensurate with the

increases allowed by the Landlord and Tenant Ordinance until the buildings are

demolished and the property re-developed," he said.

As regards the category of sites on which post war buildings stand,

though very much underdeveloped, he said "some concession, unquantified as yet,

is made."

"It would be right to come to some specific formula in terms of

discount in any review of this whole question," he added.

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