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Hong Kong Plans to Rescue Cash-Strapped Cultural District
By Mioie Kwok
Left to right: The construction of the Lyric Theatre Complex, M+, and the WKCDA Headquarters with Phillips auction house.
On July 17, Hong Kong’s Executive Council conditionally approved a proposal from the West Kowloon Cultural District (WKCD)—a harborfront cultural quarter, home to the M+ museum, Hong Kong Palace Museum, and Xiqu Centre for Chinese opera—to restructure its finances by selling residential property rights. The projected revenue received from tenders awarded to private developers is expected to sustain the district’s operational deficit and capital expenses for the next ten years.
This announcement lifts the 2016 “build-operate-transfer (BOT)” mandate, which restricted residential developments within the district’s second zone, a stretch of land along Austin Road West, situated between the Xiqu Centre and the Lyric Theatre Complex, which is slated to open in 2025/26. There are no plans to change the maximum total floor area of 170,280 square meters permitted under the extant WKCD Development Plan.
At a press conference on July 17, Hong Kong’s Secretary for Culture, Sports, and Tourism Kevin Yeung stated that the district must observe several key performance indicators on financial discipline set by the government to move forward with its proposal. These include a triennial limit on operating deficits and a specified ratio of staff costs to total annual operating expenses. Yeung added that his bureau will maintain an ongoing dialogue with the WKCD to identify viable strategies for longterm fiscal stability.
Henry Tang, the West Kowloon Cultural District Authority (WKCDA)’s board chairman, expressed gratitude to the Executive Council, as “the decision to ease the restrictions on selling the land will meet our goal of not adding to the government’s financial burden.” The approval enables the WKCDA to avoid severe cost-cutting measures, such as curtailing museum and opera house hours—a scenario Tang has cautioned the government about since 2023 if the district’s funding crisis remains unsolved. Tang foresees that the WKCD will refrain from issuing tenders for residential development for at least two years, anticipating a more favorable property market in the interim. He warned that the district would otherwise face significant challenges. These budgetary issues stem from the WKCD’s funding and operational models, as the district authority relies on a one-off endowment of HKD 21.6 billion (USD 2.8 billion) from the Government granted in 2008 to implement the WKCD, with the expectation that the project would be self-financing thereafter. The district’s original endowment is projected to run out by March 2025.
In 2022, the WKCD experienced a near doubling of net losses, escalating from HKD 869 million (USD 111 million) the year prior to HKD 1.56 billion (USD 199 million). The WKCDA had planned to secure funds through residential and hospitality developments, but the Covid-19 pandemic and market fluctuations caused significant delays in tendering his fiscal instability was further exacerbated by the district’s revenue shortfalls. Despite a 40-percent cost recovery following the pandemic, the arts hub has relied on short-term loans to remain operational; this includes an increase in bank facility from HK$4 billion to HK$5 billion (USD 640 million) earlier this year with loans from 10 banks, set to mature in 2027.
Mioie Kwok is an editorial intern at ArtAsiaPacific.
