Concrete Analysis | Why Hong Kong buildings are bigger than they appear: it’s all in the way they are measured
The lack of a standard way of measuring gross floor area leads to buildings ‘growing’, causing confusion for investors when valuing deals
Generally speaking, a building’s size is quoted in terms of gross floor area or GFA. One of the peculiarities of Hong Kong’s property market is the ability for buildings to grow in size over time.
According to Building (Planning) Regulation 23(3)(a), the GFA of a building is defined as “the area contained within the external walls of the building measured at each floor level (including any floor below the level of the ground), together with the area of each balcony in the building, which shall be calculated from the overall dimensions of the balcony (including the thickness of the sides thereof), and the thickness of the external walls of the building”.
Under this definition, the GFA of a building should be relatively static if there are no alterations made.
The actual size of a building is usually limited by either conditions in the underlying land lease, building controls or planning restrictions. These can be in the form of plot ratios, site coverage or building height restrictions. In most instances, it is usually the assigned plot ratio that dictates building size. So, a 20,000 sq ft development site with an assigned plot ratio of 15 should yield a building with a GFA no greater than 300,000 square feet.
Yet the building GFA quoted in sales and marketing collateral is often significantly higher than what is permissible through initial GFA calculations utilising the plot ratio. This can be a result of bonus GFA being awarded in lieu of the provision of certain amenities or design features, but more often than not, it is a result of developers including floor areas that were exempt from initial GFA calculations.
When calculating a building’s allowed plot ratio GFA, areas associated with car parking spaces, electrical and machine rooms, refuse chambers, refuge areas and similar provisions may be disregarded from calculations under Building (Planning) Regulation 23(3)(b).
The inclusion of exempted areas can inflate a building’s GFA anywhere from 10 per cent to 20 per cent. For industrial buildings with ramps, GFA can be close to double. Moreover, the sum of the parts is usually greater than the whole when buildings are subdivided for strata-titled sales.