Industrial property, market initiative and planning policy

Abstract

Industrial restructuring has led to increasing obsolescence of old industrial properties in many cities. Transformation of these properties to meet the requirements of modern industrial operations is becoming an imminent task for property managers and industrial landowners. This paper reviews the experience of the private sector in restructuring obsolete industrial properties in Hong Kong. In particular, we focus our discussions on a recent market initiative (composite industrial‐office property development in Hong Kong) as an innovative attempt to make better use of urban industrial space. We argue that this new property type has not been successful because of the institutional constraints imposed under the planning policy. It again confirms that the industrial property market is characterized by market imperfection, owing largely to government policies, which precludes a smooth market adjustment to respond positively to changing demand. This problem, if allowed to continue, will ultimately damage the competitiveness of the cities.