HK selling less land to avoid market turmoil
Yvonne Liu and Paggie Leung
The Hong Kong government is reducing land supply sharply to pre-empt possible turmoil in a property market that is already feeling the chill of the euro-zone crisis.
Secretary for Development, Carrie Lam Cheng Yuet-ngor yesterday plans announced to sell five residential sites and a commercial site by tender in the first quarter of next year.
The sites will generate just 430 flats, 76 per cent fewer than will be built on land sold this quarter. The five residential sites sold this quarter should provide about 1,770 flats, according to the Development Bureau.
In the first quarter of next year, only one of the sites, in Ap Lei Chau, has been earmarked for high-density development. The other four, in Clear Water Bay, Peng Chau, Tuen Mun and Repulse Bay, are for low-density development.
Lam said: 'The five sites will not provide a huge supply. Perhaps the five sites together will provide 430 flats, which is a modest figure. But taking into account what we have done already, I think this is a very good initiative to continue the momentum of supplying land.'
Lam also said the government would sell one commercial site in Tin Shui Wai, Yuen Long It sold two commercial sites this quarter.
Louis Chan Wing-kit, managing director of the residential section at Centaline Property Agency, said: 'The government didn't release any large sites. This shows it has noted the property market is struggling. They are trying to stabilise the market by [controlling the] land supply.'
However, Alnwick Chan Chi-hing, head of valuation and professional services at Knight Frank, Hong Kong, said he believed it was more likely that a number of large sites were not ready for sale. 'I don't think the government intends to cut the land supply,' Chan said.
Chan said the site in Repulse Bay was the most expensive of the lots being offered and was worth about HK$1.15 billion, or HK$28,000 per square foot. Surveyors estimate the five residential sites are together worth between HK$3.86 billion and HK$4.79 billion.
Democrat legislator Lee Wing-tat said he was disappointed that the land sites budgeted for sale would be able to yield just 430 flats. He said the government's original plan was to provide enough sites to generate more than 30,000 flats a year, but the sites released in the year to March 2012 were sufficient to build only about 20,000.
Lee questioned if the government was being pressured by developers to adjust its release of land for sale. He said flat prices had risen by about 50 per cent since 2009 but had dropped only 5 per cent of late. Lee said he was of the view that home prices would remain stable if the government rolled out enough sites for development.
According to Centaline's Mass Centa-City Leading Index, which tracks average selling prices at 86 large housing estates across the city, property prices have fallen 2.53 per cent from the market peak at the end of May.