Conservation by developers: adaptive reuse caused by difficulties in property acquisition

Abstract

This dissertation explains the emergence of adaptive reuse from economic and real estate development perspectives, and defines the particular circumstance in property acquisition that is favourable to adaptive reuse. The recent booming real estate market in Hong Kong is a favourable economic environment for redevelopment through demolition, but there is still room for adaptive reuse whereby existing buildings can be conserved. According to the economic theory of transaction cost, difficulties in implementing redevelopment scheme with demolition can absorb some of the financial incentives offered by this development activity such that adaptive reuse, the alternative option, becomes feasible. The well-documented difficulties in property acquisition particularly in the final stage involving ownership consolidation and site amalgamation should be one of the main causes for such transaction costs that make the demolition-and-redevelopment proposal abandoned. Such relationship between the difficulties in acquisition of outstanding property ownership and feasibility of adaptive reuse is verified by an empirical study on the actual development activities within the period of post-SARS property boom in a selected urban area in Hong Kong. Despite that there exist such favourable factors causing developers to settle for the adaptive reuse scheme, its sustainability is questioned. Fortunately, there are coming opportunities that enable local purchasers and developers to recognize the value and trading potential of adaptive reuse properties, which is a positive sign for sustainable success of conservation by developers through adaptive reuse in Hong Kong.