Future projects may continue recording losses: URA

The Urban Renewal Authority (URA) bosses on Sunday warned that it could face financial pressure, with winning bids awarded for upcoming projects being potentially far below the acquisition costs.

In a blog post, managing director Wai Chi-shing said future redevelopment projects could continue to incur a loss, since the socio-economic and property market conditions have not yet stabilised.

He noted that the URA would have to carry out a number of acquisitions over the coming five years.

“The expenditure is estimated to involve over HK$80 billion. Considering that the current cash flow of the URA is about HK$18 billion, there will certainly be financial pressure,” he wrote.

But he said the authority has come up with ways to remain financially sound, including using surplus generated from projects to subsidise those that are likely to suffer losses.

Redevelopment authorities also discussed financing options with several institutions, Wai added.

“The market has responded very positively to the URA’s financing plan. We expect relevant work to begin in the third quarter of this year,” he said.

Wai also said the authority is looking to simplify tendering conditions and formulate different payment arrangements for developers.