New sites for application list decline to 6-year low
New land sites added to the government's application list have slumped to a six-year low, underscoring the bleak outlook for the property market.
Only four plots of land were added to the list - from which developers can trigger an auction - compared with 26 sites added a year earlier.
If all four sites were snapped up, land sales would earn the government up to HK$2.69 billion, a surveyor estimated.
The drop in new sites reflects the growing slowdown in development activity across Hong Kong as the global financial crisis deepens. The government invited developers to bid for 62 sites last year but only one small site in Sai Kung was sold compared with eight sites in the previous financial year.
Secretary for Development Carrie Lam Cheng Yuet-ngor yesterday said that developers had adopted a wait-and-see attitude on the property market as the economic outlook remained uncertain.
The government had received only five applications for land sales in the current financial year, a situation Mrs Lam blamed on poor market sentiment rather than government development restrictions.
Developers will be invited to bid for 61 sites in the financial year from April 1. The list of sites will include nine hotel sites and 48 others rolled over from the current financial year to March 31.
Only one of the four new sites can be developed for residential purposes. It is located in Kau To, near the Chinese University of Hong Kong, and is worth between HK$1.41 billion and HK$2.26 billion, the most expensive of the newly added plots.
Alvin Lam, a director at Midland Surveyors, said the 61 sites were worth an estimated HK$51.37 billion, a decline of 19 per cent compared with the list released last year.
Under the application list system, a developer can trigger an auction by making a bid that is at least 80 per cent of a site's reserve price. Mrs Lam said the government had no plan to lower the requirement.
To encourage developers, Director of Lands Annie Tam Kam-lan said the government had increased the estimated profit margin of the developers and extended the time for development when they valued the sites.
Valuers said both changes could lower land values in the government's assessment.
However, Alnwick Chan Chi-hing, an executive director at Knight Frank, said the policies were ineffective.
'The land valuation by the government is higher than the market value. Developers will not be interested in triggering land sales,' he said.
Mr Chan said three new commercial sites located in the New Territories were unlikely to attract bids.
Eric Yuen, an analyst at Dao Heng Securities, said developers were not willing to trigger land sales as prospects for the property market remained uncertain for the next two to three years.
'With the poor market sentiment, developers will not be interested in land sales unless the government lowers prices sharply,' he said.
The Lands Department introduced the land application list system in 1999 after the regular land sales programme was suspended for nine months. Since 2004, sales of government land have been carried out solely through the application system, with regular land auctions suspended since 2003.
Mrs Lam said the land supply could be determined by market demand under the land application list system.
