XN000022-1995-05-24 — Page 27

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Third, financial viability. We have to balance the interest of property owners on one hand, and the revenues needed on the part of developers to pay for the land, construction and other costs on the other.

Fourth, social gain. We would need to consider whether and how the mechanism of urban redevelopment can be best employed to bring about improvement to the redeveloped area in terms of reduced living density and improved community facilities. We will also need to balance this with the social cost brought about by redevelopment.

Urban redevelopment in Hong Kong has traditionally been undertaken by either private developers or agents such as the Land Development Corporation and Housing Society. The difficulties I have just described make redevelopment more risky than green field sites to a private developer. But private developers have done much in the past and it would be useful to see them continuing in this area. Nevertheless there are cases where redevelopment is only marginally viable or not viable at all. In addition, as more and more old low-rise properties have already been redeveloped, private sector redevelopment is becoming less attractive and harder to implement. In recognition of this problem, the Land Development Corporation was set up in 1988 to undertake projects which are too difficult and too risky for private developers acting alone. The early years of the LDC have not been without problems and many valuable lessons have been learned - but overall the LDC has achieved some important successes. There are a number of valuable urban renewal projects now being constructed, which would not have gone ahead without the LDC. We now want to build on that foundation as the LDC reaches maturity and moves on to its second phase of projects.

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Mr President, I would now wish to describe the solutions which the Administration have been developing.

First site assembly. In many instances resumption is the only realistic

way to bring together the separate property interests needed for urban renewal projects, which is often the greatest obstacle to urban redevelopment. We therefore envisage continued use of the LDC mechanism. We have considered very carefully whether the use of resumption powers should be extended to projects proposed directly by private developers. On balance, our conclusion is that this would be going too far. The resumption of private property by Government using statutory powers is a very serious step and not to be undertaken lightly. Private developers are, after all, commercial interests and we believe it would be wrong to use Government's powers to support a private development scheme directly, even though there may be significant community benefits in doing so.

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