The purpose of urban renewal is to improve the living conditions of residents in older urban areas. It involves redeveloping dilapidated buildings, rehabilitating old buildings, revitalising old districts, and preserving buildings of historical, cultural or architectural interest.

The Urban Renewal Authority was established in May 2001 to undertake a 20-year renewal programme. The Urban Renewal Strategy (URS), published in November 2001, sets out the policy guidelines for the authority's programme.

Following the Government's approval of the plans, the Finance Committee approved a $10 billion commitment in June 2002 for phased injections of capital into the URA during 2002-03 to 2006-07. All of the $10 billion have now been injected into the URA.

The Housing, Planning and Lands Bureau keeps the programme's progress under close review. It also provides support and policy guidance to the URA, monitors and facilitates the implementation of individual projects, including vetting development projects, and oversees land resumption and clearance work to be undertaken by the Lands Department.

By end of 2006, the URA had launched 30 redevelopment projects, four with preservation elements, eight of which were carried out by the Hong Kong Housing Society (HKHS) under a partnership arrangement between URA and HKHS. The URA also continued its building rehabilitation schemes providing materials, technical assistance, interest-free loans, grants and subsidies for third-party liability for buildings that have been rehabilitated to owners in need to encourage them to undertake building maintenance. The URA is also planning and implementing a number of revitalisation initiatives, which include a series of street and area improvement projects in Mong Kok, Yau Ma Tei, Tai Kok Tsui, Sheung Wan, Wan Chai, Sai Ying Pun, Sham Shui Po and Tsuen Wan.