Aging buildings problem needs to be addressed aggressively

Instead of seeing it as a complicated, expensive problem, aging buildings represent opportunities to improve livability and enable Hong Kong to achieve its carbon-neutrality goal by 2050. 

Hong Kong’s vision of itself is as “Asia’s World City”, the images of which are the city’s gleaming high-rise buildings. Hong Kong also advertises itself as the region’s international green finance center.

Hong Kong should aim to be “Asia’s Green World City”. Why is this important?

On the one hand, the global goal of decarbonization is redefining economic development and competitiveness. Hong Kong has to think “green” in everything it does, including its buildings, which use 90 percent of the city’s electricity and emit 60 percent of its carbon.

On the other hand, improving the well-being of residents is how Hong Kong people judge its own government. Improving the quality of buildings where people live and work is a key yardstick, not just building more housing, as the number of existing buildings exceeds new ones.

There are approximately 50,000 buildings in Hong Kong. Of these, 9,100 were older than 50 years in 2021; and by 2030, the number will be closer to 14,000.

Of the 50,000 buildings, 44,250 are private, with 81 percent being residential buildings; a small percentage is industrial; and most of the rest is commercial.

Hong Kong’s commercial buildings emit two-thirds of the total carbon emissions arising from buildings, while most of the rest is from residential buildings.

The best of the city’s buildings have already had face-lifts and improvements to maintain their asset values, commensurate with the high rents they charge.

The better property companies — a minority — are retrofitting their buildings for environmental and social reasons to meet international standards and achieve low-carbon and sustainability goals, which are what global investors and bankers are demanding.

Hong Kong has its fair share of dilapidated and poorly managed buildings. The government tried to use the Building Management Ordinance (1993) to get private-building owners to volunteer to form owners’ corporations (OCs) to take responsibility. The Mandatory Building Inspection Scheme (2012) requires buildings with more than three stories and older than 30 years to be inspected, and for identified problems to be fixed.

About 47 percent of all Hong Kong’s private buildings now have OCs, which means 53 percent still don’t. Many identified problems after inspections have not been fixed for a range of complex reasons, such as owners not being able to agree on what to do and not having the means to do so. The Operation Building Bright program (2018), backed by HK$6 billion ($764 million) to subsidize owners to make repairs, is ongoing, at the end of which the program could help only 5,000 buildings by 2025.

Moreover, many of the old buildings are ripe for redevelopment, but it hasn’t been easy because of multiple ownerships. The law used to require agreement from more than 90 percent of the owners before triggering the compulsory sale of the remaining owners. The threshold was lowered to 80 percent in 2010, and the government is proposing to reduce it to 70 percent for buildings over 50 years, and to 60 percent for buildings older than 70 years.

The government’s various efforts are helpful and laudable. Perhaps this is now the time to think more aggressively about speeding and scaling up the transformation of buildings in Hong Kong.

The best in class are already ahead of regulations because they know how to monetize from being a strong green performer in the market. The problem is the majority, who have yet to get going.

The effort for new buildings must be to mandate high green performance rather than making it optional through granting gross-floor-area incentives, as is the case today. The effort on existing buildings must be to tighten regulations so they can be retrofitted for sustained green performance.

Hong Kong’s built environment professionals and green building institutions, such as the Hong Kong Green Building Council, have already provided a large number of ideas over the years on the technical aspects of what to do.

Indeed, government officials are familiar with the challenges, and those in housing and architectural services are seasoned professionals.

Legislators have also raised questions about expediting redevelopment, as well as improving existing buildings. They know this is an important quality-of-life issue for the community.

If the Hong Kong Special Administrative Region government gave itself the task of putting together a 25-year program to retrofit a sizable portion of Hong Kong’s buildings by 2050 to save energy and other resources and to improve the well-being of occupants, it could reformulate the relevant laws, codes, regulations and incentive programs to follow suit.

Hong Kong is not alone in meeting the challenge with buildings. The national government has issued new laws, as have the authorities in Singapore, just to name two.

The secret of success is a clear articulation of purpose and goals, and a strong alignment of the necessary tools of government, to get the development market going in a new direction that delivers on new green buildings and retrofits.

Money is needed — lots of it. Hong Kong’s financial services sector has yet to be asked to work with the government and interested building owners to devise financing frameworks that could sustain a long-term retrofit program.

Could the Hong Kong Monetary Authority act as the coordinator for exploratory dialogue to find innovative financing ways?

The author is the chief development strategist of the Institute for the Environment, Hong Kong University of Science and Technology.

The article was published on China Daily: https://www.chinadailyhk.com/article/a/314422