The escalating rental rates and prices of apartments in Hong Kong are helping to start a new trend of converting older commercial and industrial buildings into trendy lofts.
According to property agents, lofts are the latest trend in HK and they are often created from old or unused offices and industrial buildings without the formal approval of the government. The buildings are converted into lofts because they have high ceilings and are priced below the market rates.
It was claimed that while a standard $500 sq ft apartment in the city might give back HK$4 million, one can earn double in the unofficial loft market.
One property agent said that he recently helped an expat purchase an 800-sq-ft residential unit for HK$32 million, which the buyer plans to use as his home and office unit.
“Rents of homes in Sheung Wan range from HK$20 per sq ft to as much as HK$40 per sq ft, but tenants in such loft apartments are paying less than HK$15 per sq ft,” said the property agent.
Although these types of properties might be a bargain for buyers and tenants, they end up with an unfashionable address and run the risk of breaching government regulations.
A spokeswoman of the Buildings Department in HK said, whether such conversions are legal or not, it would still depend on whether the building was zoned for residential use or changes had been carried out in the structure, in which case the approval of the Buildings Department was required.
“For example, if an owner renovates a bathroom that requires a structural change, but does so without our approval, we will require the owner to restore it because they are illegal structures,” said the spokeswoman.
Charles Chan Chiu-kwok, managing director of Savills Valuation and Professional Services, said that the usage of the building was mentioned on the occupation permit issued during its construction, and if the owner does not follow the designation, the use of the building will not be lawful.
According to the Consumer Council, there has been an increase in the number of apartments located in former industrial buildings. They warned that converting commercial or industrial buildings into residential units requires the approval of the Town Planning Board, and buyers could not use the converted units if the developer was not granted a change of use.