As a new initiative to encourage the revitalisation of industrial buildings (IBs) in Hong Kong, the Development Bureau introduced a pilot scheme on 4 March 2021 to charge land premiums at standard rates for lease modifications for IB redevelopment. We set out below some brief Q&A for easy reference.

Q1: When Will it Start?

The scheme will run for two years starting from 15 March 2021.

Q2: What IBs Are the Scheme's Targets?

The scheme applies to IBs constructed before 1987 (the year when the Fire Services Department tightened fire safety requirements).

Q3: Will the Scheme Affect the Existing Conventional Mechanism?

No. According to a Government spokesman, it will run parallel (as an alternative) to the conventional mechanism for premium assessment.

If lease modification applicants do not find it attractive to have land premiums calculated at standard rates, they may opt to have their cases processed using the existing conventional approach for land premium assessment.

Q4: What Are the Standard Premium Rates?

Standard rates are promulgated for five geographical regions in Hong Kong and three types of uses involved in lease modifications for IBs.

IB owners can readily compute the premium payable based on the uses and gross floor areas (GFA) before and after the lease modification:


Before use After use
Industrial/godown Commercial/ 
modern industrial
Hong Kong Island  HK$40,000/m2  HK$75,000/m2  HK$130,000/m2
Kowloon East  HK$40,000/m HK$65,000/m2  HK$100,000/m2 
Kowloon West  HK$35,000/m2  HK$60,000/m2  HK$110,000/m2 
New Territories South  HK$35,000/m2  HK$50,000/m2  HK$75,000/m2 
New Territories North  HK$20,000/m2  HK$30,000/m2  HK$55,000/m2 


Quick example: For an applicable IB in Hong Kong Island, with a GFA of 8,000 m2 for industrial/godown use before the lease modification and a GFA of 6,000 m2 for residential use, the premium payable will be:

Standard Rate (After Use) × GFA (After) - Standard Rate (Before Use) × GFA (Before)

= HK$130,000/m2 × 6,000 m2 - $40,000/m2 × 8,000 m2

= HK$460 million

Q5: Are More Detailed Guidelines to Follow?

Yes. A Practice Note will be published on 15 March 2021 to provide further operational details of the new scheme, such as:

  • How lease modification applicants may exercise the right to opt for calculating land premiums by standard rates;
  • The transitional arrangement applicable to lease modification cases under processing; and
  • The calculation of GFA.

Originally Published by Mayer Brown, March 2021

Visit us at

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2020. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.