G.S. 84
RESTRICTED
3
2
XCR(80)64
inappropriate to compare the price of industrial building land with pier leases which, in his opinion, are more akin to open storage areas in the sense that they cannot be built over or put to other uses and serve a strictly limited purpose. He has proposed that the standard Short Term Tenancy open storage rental of $65/m2 should be adopted as the yardstick (which equates to an increase of 5.5 times given that pier rentals at the moment average out at $12/m2) and makes the point that as the piers stand separately and do not abut from or form part of any parent lots, they provide only indirect marine access which cannot be compared in value terms to those offering direct access. The Director has also drawn a comparison with the favourable rentals enjoyed by the Star Ferry and Hong Kong and Yau Ma Tei Ferry Companies for their use of Government piers.
7
The Secretary for Economic Services considers that, in principle, the variety of economic values of the piers arising from their differing locations and landside facilities should be reflected in their rentals. Thus valuations made should appraise the merits of individual piers in order to establish rentals.
8
The Secretary for the Environment in consultation with the Director of Lands, Survey and Town Planning has considered the objections described in paragraphs 6 and 7 above. Turning first to the Director of Trade, Industry and Customs' points, the twelvefold increase in industrial land prices since 1964 is a matter of fact as evidenced by land sales at Crown Land Auctions and in private land transactions. Comparison with the standard Short Term Tenancy rental for open storage is not valid since no account is taken of the value of marine access. The proposed
2 $150/m2 p.a. rental cannot be compared with the rental for Star Ferry and the Hong Kong and Yau Ma Tei Ferry Company ferry piers because the basis of assessment is entirely different. The ferry piers are held under franchise and are scheduled in an Ordinance, and rentals are calculated on a percentage basis of the historical construction cost. The original rent for the permanent piers now under discussion was calculated by reference to a basic "maximum" of 25¢ p.s. f. a year in 1949. Upon renewal in 1964, a straight multiplication factor of 5 was applied to the rentals then passing. It was acknowledged that this "5" factor was an arbitrary one (memorandum XCR(64)128) refers). The figure of $150/m p.a. (assessed on August 1979 values) will bring the rentals nearer to the sum that would be obtained if the present lessees had to compete for them in the open market.
9
With reference to the Secretary for Economic Services' objections, as explained in paragraph 4(a) and (e) above, the pier lease formula is not applicable and there have been no recent tenders for Government piers.
2
RESTRICTED
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