Hong Kong’s cash-strapped urban renewal body has secured a HK$13 billion bank loan to fund its redevelopment projects.
The Urban Renewal Authority (URA) on Thursday said it had signed a loan agreement amounting to HK$13 billion with a consortium of 13 banks, “whose collective support underscores the robustness and credibility of the URA’s financial framework.”
The URA, which operates its accounts separately from the Hong Kong government, has been in the red for two years in a row, posting a HK$3.9 billion deficit in the 2023-24 fiscal year and a HK$3.5 billion deficit in 2022-23.
In its annual report for the previous fiscal year, the quasi-governmental body attributed its poor financial performance to the city’s property market downturn.
On Thursday, the URA said the loan would afford it the financial flexibility to execute its projects and capital improvement plans efficiently.
The Industrial and Commercial Bank of China is listed as the coordinator of the consortium, while the Hong Kong branch of Japan’s Mizuho Bank is listed as the agent. Institutions including Hang Seng Bank, HSBC, and Standard Chartered are also among those that signed the loan agreement.
“This facility agreement provides the URA with secured funding which will be strategically employed to fulfil the URA’s long-term mission of promoting the sustainable development of urban renewal, improving the built environment and enhancing residents’ standard of living in older districts, contributing to a more liveable Hong Kong,” the statement read.
Property market slump
The URA move comes amid a property market slump that the government has cited as the reason behind an expected HK$100 billion deficit.
Finance chief Paul Chan last month said the struggling market meant less revenue from land sales and stamp duties, which in turn caused its estimated deficit to more than double from the HK$48 billion forecast in February.
Last November, the URA said it would look into taking over a Kowloon City redevelopment project after failing to issue a tender for the project.
Managing Director Wai Chi-sing said in a blog piece that the authority did not award the tender after it attracted a sole bid that proposed additional terms that deviated from the URA’s plans for the project.
Wai also said that the lack of income from developers for the Kowloon City project would impact the URA’s cash flow, adding that the redevelopment body would look into bond issuance and loans “at the appropriate time.”
The URA issued a twice-oversubscribed HK$12 billion bond offering last August to support property acquisitions over the next two years.
