Premiums set to fall to 10-year low
Land revenue for this financial year will fall $19 billion below target to its lowest level in a decade, according to new forecasts.
The Finance Bureau revised down its estimates of income from land sales and charges of land-use to $8.5 billion from the $27.5 billion forecast in March.
If the figures are accurate, land premiums will fall to their lowest level in 10 years, even below the $19.3 billion in 1998-99 when the Government suspended land sales for nine months.
That move was aimed at preventing a property market collapse in the wake of the Asian financial crisis.
This year's revised land revenue will account for only 4.4 per cent of the estimated total government revenue, instead of the 10.9 per cent predicted.
In the past four financial years, land income has comprised between 8.9 per cent and 22.6 per cent of government revenue, according to the Finance Bureau.
The bureau did not provide a breakdown of land revenue but analysts said smaller-than-expected income from land auctions and tenders was the main reason behind the shortfall.
The Government has transferred most large sites to the reserve list. Land is not released for sale until developers apply for purchase by offering a satisfactory price. But few developers have made applications this year due to the sluggish property market.
Last week, Sun Hung Kai Properties signed a $2.1 billion deal for seven projects, which slightly boosted land revenue.