Since the Government revealed the eight site selections and construction costs of LPH at the end of last year, it has been the subject of controversy. The Housing Bureau (HA) today (11th) submitted a document to the Legislative Council (LegCo) to apply for funding for the second batch of light public housing (LPH), which refers to the land in Leung Tong Mei in Sheung Shui, which was loaned by New World and replaced by other projects with better locations due to its relatively low cost-effectiveness. The first batch of light public housing tenders has been tendered earlier, and the return bid price has been reduced by $30 billion, or 20%, compared with the original estimate. Therefore, the second batch of LPH can also be reduced by MOP16.9 billion (15%) to MOP95.4 billion, i.e. the cost of the entire LPH can be reduced by at least MOP46.9 billion, a reduction of nearly 59%.
According to the document, under the new estimate, the cost per unit of a high-rise building project could be reduced to about $98,4, but the details of the relevant calculation method have not been disclosed after a year, but if the cost of the batch of 1,3 flats is extrapolated from the second batch of the budget of $75.7 billion, the average cost is still as high as $<>,<>, which is similar to that of traditional public housing.

▼Tuen Mun District 54 simple public housing site selection▼


The first batch of projects were returned to the bid price lower than the budget, saving 30 billion

According to the latest documents of the Housing Bureau, the remote Liantang Mei project in Sheung Shui, which has been criticised, has decided not to take forward the project due to its relatively low cost-effectiveness. Sources pointed out that Liantang Mei was originally a low-rise project, which was relatively cost-effective, and it also needed to be equipped with electricity and sewage treatment.

The document also mentioned that the return bids for the first batch of projects were lower than the budget, and two of the first batch of LPH project contracts were $7 million and $8.22 billion lower than the original budget, i.e. a total reduction of about $3 billion, i.e. about $30 billion, or about 149%, compared with the $1.30 billion allocated by the Finance Committee for LPH at the beginning of this year.

The authorities lowered the estimate for the second phase by 16.9 billion

The document mentions that, with reference to the tender prices of the first batch of light public housing projects, it is considered that the second batch of projects can also be reduced from the original estimate of about $115.3 billion to $98.4 billion, i.e. about $16.9 billion, a reduction of about 15%.

In other words, the actual cost of the first batch of 4 projects and the cost of the second batch of 9 projects will be reduced by a total of $46.9 billion, or about 17.7%, but since the funding for the first batch of projects was approved at the beginning of the year, the overall funding can only be estimated at the second batch of adjustments, which is still not approved, so the funding requirement for the entire LPH can only be reduced by $16.9 billion, or about 6%.

▼On October 2022, 10, the Housing Bureau announced the design of simple public housing interiors▼

The average unit cost was lowered from 65,59 to about <>,<>

In this project, after removing the remote site of Liantang Mei in Sheung Shui, using the official land of Hengguang Street in Ma On Shan, and "filling in the numbers" through the renovation of 5 vacant schools, the document mentions that the latest estimate of the Architectural Services Department (ARD) that the average unit cost of high-rise simple public housing buildings can also be lowered from the estimated 65,59 yuan at the beginning of this year to about 50,<> yuan. As for the conversion of school premises, the average cost per flat is about $<>,<>, which is similar to the existing similar transitional housing projects, "which are expected to provide simple public housing units at a shorter and lower cost".

Asked why the budget of the second batch of projects was not reduced by 20% by the same standard, while the second batch of projects included lower-cost school building renovation projects, a source from the Housing Bureau pointed out that the authorities had lowered the budget of the second batch of projects with reference to the bid-back prices of the first batch of projects, "but it could not be directly settled", but it was not ruled out that there would be room to reduce the construction cost after the bidding in the future.

▼Four of the school buildings were converted into simple public housing sites▼

No details of unit cost were provided The book per unit is similar to that of traditional PRH

As for why there is such a big gap between the actual construction cost and the budget, sources pointed out that the authorities have done market sounding in advance before the tender, so that the market can prepare in advance and cut the construction cost in the tender, "especially for the production of MIC (prefabricated modules), in fact, they have room to adjust", and the tender documents have also reserved space for the market to improve the production process in innovative ways, so the cost can be further reduced.

When asked about how the cost of each unit is calculated, the Housing Authority source did not provide relevant details. However, if the average cost of the 1,3 units in the second batch is extrapolated from the second batch of estimates, the "booked" cost of each unit is $75,69, which is similar to the latest cost of $76,217 for traditional public housing, and if the total cost of $5.247 billion (the overall allocation is $5.30 billion, net of the $72 billion saved in the first batch of projects) divided by 5,55 units, the cost per unit is still as high as $17,5, which is $<>,<> more expensive than the average of $<>,<> for transitional housing.

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