Hong Kong developers face tougher competition for land sites, says JLL
Residential property prices seen rising 5 per cent in 2017 as land costs escalate, JLL analyst says
Hong Kong developers are finding it increasingly difficult to keep adding to their supply of land as their mainland counterparts push into the city’s property market, says Jones Lang LaSalle (JLL).
Mainland developers bid on around 62 per cent of the residential sites sold via government tender so far this year, up from 53 per cent in 2015. They won around 24 per cent of the sites in 2016, on par with the whole of last year.
“The local developers, they’re backing away,” Joseph Tsang, managing director and head of capital markets at JLL, told the Post. “I don’t mean they don’t put in a bid, they still put in a bid, but ... it’s all gone to the mainlanders,” he said, referring to record prices paid recently for land sites, including one in Kai Tak.
Hong Kong companies are bidding on land based on market expectations, but the presence of mainland developers has seen 10 out of 13 residential sites sold in the second half of 2016 exceed forecasts.
Earlier in November, a government land site in Kai Tak was sold to Chinese conglomerate HNA Group for a record-breaking HK$8.84 billion, more than double the price paid for similar site in 2014.
Hong Kong property and casino tycoon Lui Che-woo lost out on the site, telling the Financial Times it is difficult for local companies to match mainland funds.
“Mainland companies have the ability to do it, but we don’t,” he was quoted as saying.