Urban Renewal Authority Economic Impact Assessment Study on the Urban Renewal Authority's Urban Regeneration Projects Tsuen Wan Town Center Redevelopment Project Economic Impact Case Study FINAL Urban Renewal Authority Economic Impact Assessment Study on the Urban Renewal Authority's Urban Regeneration Projects Tsuen Wan Town Center Redevelopment Project Economic Impact Case Study May 2010 This report takes into account the particular instructions and requirements of our client. It is not intended for and should not be relied upon by any third party and no responsibility is undertaken to any third Ove Arup & Partners Hong Kong Ltd party Level 5, Festival Walk, 80 Tat Chee Avenue, Kowloon Tong, Kowloon, Hong Kong Tel +852 2528 3031 Fax +852 2268 3956 www.arup.com Job number 210939 Urban Renewal Authority Economic Impact Assessment Study on the Urban Renewal Authority's Urban Regeneration Projects Tsuen Wan Town Center Redevelopment Project Economic Impact Case Study Contents Page Executive Summary 1 Introduction 1 1.1 Background 1 1.2 Study Context 1 1.3 Objectives 2 1.4 Limitations 2 1.5 Report Layout 3 2 Urban Regeneration Policy and the Project 4 2.1 URA Regeneration Policy 4 2.2 Vision City and CityWalk 4 3 Approach and Methodology 10 3.1 Introduction 10 3.2 Literature Reviews 10 3.3 Stakeholder Engagement 10 3.4 Employment and Income 12 3.5 Business Volume, Activity and Customer Profile 12 3.6 Real Estate Prices and Property Levels 13 3.7 Property-related Government Revenues 14 3.8 Wider Economic Impacts 17 4 Tsuen Wan and its Position in Hong Kong 18 4.1 Location 18 4.2 Historical Context 18 4.3 Social and Economic Profile 19 4.4 Hong Kong Inflation and GDP Trends 25 4.5 Zoning Plan Changes 26 5 Stakeholder Feedback 28 5.1 Introduction 28 5.2 Stakeholder Feedback 28 5.3 Survey Results 29 6 Capital Value Analysis 39 6.1 Introduction 39 6.2 Vision City 39 6.3 400 Metre Radius Area 40 6.4 Tsuen Wan District 42 6.5 Area Comparisons 43 6.6 Sales Transactions 46 7 Rental Analysis 48 7.1 Introduction 48 7.2 Domestic Rents 48 7.3 Non-Domestic Rateable Values (CityWalk) 54 G:\...\Draft Submission 12May2010\Final Report_12May2010.doc Ove Arup & Partners Hong Kong Ltd Urban Renewal Authority Economic Impact Assessment Study on the Urban Renewal Authority's Urban Regeneration Projects Tsuen Wan Town Center Redevelopment Project Economic Impact Case Study 8 Existing Use Value 61 8.1 Introduction 61 8.2 Existing Use Value Before the Re-development 61 8.3 Existing Use Value After the Re-development 62 8.4 Existing Use Value Comparison 65 9 Property-related Government Revenues 67 9.1 Introduction 67 9.2 Stamp Duty 67 9.3 Rates 67 9.4 Government Rents 69 9.5 Property Tax 69 9.6 Summary of Government Revenues 70 10 Economic Impacts of the Project 71 10.1 Employment 71 10.2 Income 73 10.3 Additional Gross Retail Sales 74 10.4 Wider Economic Benefits 75 11 Discussion and Conclusions 78 11.1 Introduction 78 11.2 Economic Findings 78 11.3 Survey Results 81 11.4 Conclusions 83 Tables Table 1 Businesses in the Project Site Before Redevelopment Table 2 Businesses in the Project Site After Redevelopment Table 3 Comparison of Businesses in the Project Site Before and After Redevelopment Table 4 Project Details Table 5 Project Cost Table 6 Summary of Event Types Table 7 Event Days Table 8 Survey Stakeholders Table 9 Businesses Identified in the Study Area Table 10 Interviewed Stakeholders Table 11 Legal Binding Documentation Head Classification Table 12 Computation of Net Assessable Value Table 13 Tax Rates Table 14 Population and Household in Tsuen Wan, New Territories and Hong Kong (1991-2006) Table 15 Median Age Table 16 Domestic Households by Type of Quarters (2006) Table 17 Median Household Rent and Mortgage Repayment (2006) Table 18 Findings Business in Study Area Table 19 Findings Original Businesses in Study Area Table 20 Findings Pedestrians in Study Area Table 21 Findings Shoppers in City Walk Table 22 Findings Commercial Tenants in City Walk Table 23 Findings Residents in Vision City Table 24 Historical Domestic Capital Values in Vision City (HK$sq ft) G:\...\Draft Submission 12May2010\Final Report_12May2010.doc Ove Arup & Partners Hong Kong Ltd Urban Renewal Authority Economic Impact Assessment Study on the Urban Renewal Authority's Urban Regeneration Projects Tsuen Wan Town Center Redevelopment Project Economic Impact Case Study Table 25 Basket of Domestic Developments within the 400m Area Table 26 Historical Domestic Capital Values in 400m Radius (HK$/sq ft) Table 27 Historical Domestic Capital Values in Tsuen Wan (HK$/sq ft) Table 28 Historical Domestic Capital Values in Tsuen Wan (HK$/sq ft) Table 29 Historical Domestic Capital Values in New Territories and Overall Hong Kong (HK$/sq ft) Table 30 Number of Domestic Transactions (units) Table 31 Historical Domestic Rateable values in Vision City (HK$/sq ft/month) Table 32 Basket of Domestic Developments within the 400m Area Table 33 Historical Domestic Rateable Values in 400m Radius (HK$/sq ft/month) Table 34 Basket of Domestic Developments in Tsuen Wan Table 35 Historical Domestic Rateable Values in Tsuen Wan (HK$/sq ft/month) Table 36 Historical Domestic Rateable Values in Tsuen Wan (HK$/sq ft/month) Table 37 Historical Domestic Rateable Values in New Territories and Hong Kong SAR (HK$/sq ft/month) Table 38 Historical Non-domestic Rateable Values in vision City (HK$/sq ft/month) Table 39 Basket of Non-domestic Developments within the 400m Area Table 40 Historical Non-Domestic Rateable Values in 400m Radius (HK$/sq ft/month) Table 41 Historical Arcade Non-domestic Rateable Values in Tsuen Wan (HK$/sq ft/month) Table 42 Historical Street Front Non-domestic Rateable Values in Tsuen Wan (HK$/sq ft/month) Table 43 Historical Non-domestic Rateable Values in New Territories and Hong Kong SAR (HK$/sq ft/month) Table 44 Adjustment Rationale for EUV Before the Re-development Table 45 Adjustment Rationale for EUV After the Redevelopment Table 46 Adopted Unit Rates for Domestic Development Table 47 Rental Comparables – The Project Table 48 Adopted Unit Rates for Non-domestic Development Table 49 Direct Capitalisation of Income Assumptions Table 50 Discount Rate Assumptions Table 51 Summary of Values Table 52 Summary of Values with Adjusted Prior Development Value Table 53 Considerations for Stamp Duty Table 54 Average Rateable Value (HK$/sq ft/year) Table 55 Total Rateable Value (HK$/sq ft/year) Table 56 Total Rates Collected (HK$) Table 57 Net Change in Annual Rates Collected (HK$) Table 58 Total Government Rents Collected (HK$) Table 59 Net Change in Annual Government Rents Collected (HK$) Table 60 Computation of Net Assessable Value Table 61 Summary of Additional Government Revenues (Approximate) Table 62 Estimated Construction Stage Direct Employment Impacts Table 63 Estimated Additional Employment Opportunities Table 64 Occupation Types in CityWalk Commercial Tenants Table 65 Acquisition Costs to Domestic and Non-domestic Owners (1997 Prices) Table 66 Estimated Additional Income Generated by the Project Table 67 Estimated Annual Gross Retail Sales in CityWalk Table 68 Estimated Annual Expenditure in CityWalk Table 69 Estimated Net Change in Expenditure Table 70 Construction Value Added Multiplier Effects Table 71 Construction Indirect Employment Multiplier Effects Table 72 Estimated Annual GVA per worker by Industries in Hong Kong Table 73 Changes in Annual GVA in the Project Site Table 74 Key Estimated Economic Impacts of the Project (Approximate) Table 75 Summary of Values with Adjusted Prior Development Value G:\...\Draft Submission 12May2010\Final Report_12May2010.doc Ove Arup & Partners Hong Kong Ltd Urban Renewal Authority Economic Impact Assessment Study on the Urban Renewal Authority's Urban Regeneration Projects Tsuen Wan Town Center Redevelopment Project Economic Impact Case Study Figures Figure 1 Defined 400-Metre Radius Area Figure 2 Pre-development Western Tsuen Wan Figure 3 Post-development Western Tsuen Wan Figure 4 Pre-development Yeung Uk Road Figure 5 Post-development Yeung Uk Road Figure 6 Pre-development Residential Figure 7 Post-development Residential Figure 8 Pre-development Street-level Retail in Wo Tik Street Figure 9 Post-development Retail Shopping Mall Figure 10 Location Map of Tsuen Wan District Figure 11 Population Distribution by Age in Tsuen Wan (1991 - 2006) Figure 12 Population Distribution by Highest Education Attainment in Tsuen Wan (1991 - 2006) Figure 13 Median Monthly Household Income in Current Prices for Households (1991-2006) Figure 14 Individual Median Monthly Income from Main Employment at Current Prices (1991- 2006) Figure 15 Working Population Resident by Occupation, Tsuen Wan Town Centre (1991-2006) Figure 16 Tsuen Wan Industrial Composition (1991 - 2006) Figure 17 Composite Consumer Price Index, Year on Year Change (%) (1991 – 2008) Figure 18 Real GDP, % Year on Year Change, 1991 – 2008 (2007 Prices) Figure 19 Changes of Land Use in Tsuen Wan from 1996 to 2008 Figure 20 Surveyed Businesses in Study Area by Categories Figure 21 Historical Domestic Capital Values in Vision City (HK$/sq ft) Figure 22 Historical Domestic Capital Values in 400m Radius Figure 23 Historical Domestic Capital Values in Tsuen Wan Figure 24 Vision City vs. 400m Vicinity and Tsuen Wan – Residential Capital Value Figure 25 Vision City vs. New Territories and Hong Kong Territory – Domestic Capital Value Figure 26 Domestic Transactions Figure 27 Historical Vision City Domestic Rateable Values Figure 28 Historical Domestic Rateable Values in 400-metre Radius Figure 29 Historical Domestic Rateable Values in Tsuen Wan Figure 30 Vision City vs. 400-metre Vicinity and Tsuen Wan – Residential Rental Figure 31 Vision City vs. New Territories and Hong Kong Territory – Residential Rental Figure 32 Historical Vision City Non-domestic Rateable Values Figure 33 Historical Non-domestic Rateable Values in 400m Radius Figure 34 Vision City vs.