Evaluation of the impacts of resale of privatized shopping centres in public housing estates in Hong Kong

Abstract

More than 45% of the population in Hong Kong is living in Public Rental Housing (PRH) or Homeownership Scheme (HOS) estates. Most PRH and HOS estates have different shopping facilities to meet the daily needs of residents including retail, car park or welfare. Commercial facilities in PRH and HOS estates are the essential elements and major components which serve the purpose of providing daily necessities for local residents. Hence, it is not a pure commercial facility but a community facility to serve the whole neighbourhood. Nevertheless, 180 commercial facilities in PRH and HOS estates were privatized and acquired by Link REIT in 2005 to relieve the Government’s financial situation after the economic downturn. After privatization for 9 years, the Link REIT had made various changes to those privatized commercial facilities, including asset enhancement initiative to reform the image of those old commercial facilities and raise the unit rents to market level. Starting from 2014, the Link REIT announced to re-sell some of the retail and car-parking facilities in the open property market to maintain a strong portfolio with sustainable growth. This dissertation tries to study the impacts of the resale of those privatized public assets on the community, especially for the shop tenants and residents nearby. It was hypothesized that the resale of the privatized public assets by Link REIT has more damages than benefits to the community from the view of shoppers, tenants, and residents. The action may affect the residents’ livelihoods and tenants’ business prospects. Questionnaires survey for the shop tenants and shoppers to gather their opinions for the management performance, rental level, business environment and customer satisfaction in selected shopping centres, observational research will also be used to observe the actual condition of selected shopping centres. The results show that the business and investment decisions of new owners are the main factors to determine the possible social and economic impacts on shop tenants and local residents. Once the nature of public facilities had changed, it is hard to resume normal. The distortion of those privatized shopping centers makes the residents and tenants suffer, and it also creates different management problems and dispute between the new owner and the local community. Being a responsible corporation, profit maximization is not the only way to succeed. Taking care of related stakeholders and bear the social responsibilities is another way to achieve sustainable business opportunities. Besides, the Government being the initiator of this messy situation, should bear the major responsibility to ensure the functions of those original public assets. The Government should also seriously evaluate the idea of privatization in the future, and try to establish more rules and regulations to protect the interest of public.