45 land sites expected to generate up to $95b

PUBLISHED : Saturday, 18 March, 2006, 12:00am
UPDATED : Saturday, 18 March, 2006, 12:00am

But developers still critical of 'inflexible' application list system for auctions

Developers will be invited to bid for 45 sites in the coming financial year. If all are snapped up, land sales will earn the government $95 billion, property agent Midland Realty says.

While small- and medium-sized developers welcomed the move to make smaller sites available for auction, the inflexible application list system is still under fire.

The list of sites for auction comprises 28 rolled over from the current financial year, ending March 31, and 17 new ones.

Under the application list system, developers can trigger an auction for a site by making a bid equal to at least 80 per cent of the government's reserve price, which it does not disclose.

Director of Lands Patrick Lau Lai-chiu said the new list, with its 33 residential and 12 commercial sites, offered a wider variety of land plots in response to market needs. Of the sites, 18 are of less than 1.5 hectares; all but five of these are for residential development.

Mr Lau was confident the list would be attractive to developers. 'Land supply should be determined by market demand,' he said, but declined to forecast how the list would be received by developers. 'It is difficult to project how much revenue the list will bring, though, as it depends on a number of factors.'

Industry players generally welcomed the government's move to offer smaller plots and more commercial sites for development.

However, the inflexibility of its pricing structure remained a major concern, they said.

Benny Tse Man-bun, an executive director of small developer SEA Holdings, praised the move to add smaller plots because it would offer more development opportunities for small- and medium-sized developers. 'However, developers are still having difficulties in gauging the government's reserve price to trigger a land auction under the current land application list system,' Mr Tse said.

Chesterton Petty executive director Alex Ng Siu-lam agreed, saying that even if the government had the perfect mix of plots on the list, it would not benefit the market when inflexibility in the pricing remained.

All eyes will be on the fate of the Central Market site, which is classified as commercial, in the wake of concerns over a lack of new office supply in Central.

'The government has tried to respond to market needs by offering different sites. But when you take into account the attractiveness of the sites, it has not offered many surprises,' said James Cheung King-tat, a senior associate director of Centaline Surveyors. 'Among the 17 new sites added to the list, only four are attractive.'

He said most developers would be keen on the Valley Road Estate site in Ho Man Tin, priced at about $9.4 billion, and three others - in Wong Tai Sin, Broadcast Drive in Kowloon Tong and Ko Shan Road in Hunghom.