Hong Kong’s government will scrap the land application list system – under which developers can trigger land auctions – in order to increase its control over the city’s land supply.
Secretary for Development Paul Chan Mo-po announced on Thursday the land application list system would be cancelled at the start of the 2013-14 financial year in April.
Under the system, a developer who wants to acquire a site on the application list submits a price to the Lands Department, which cannot be less than 80 per cent of the undisclosed price set by the government. If a developer’s submission meets this criterion, this triggers a public auction for the site.
The system was introduced in 1999 and was intended to complement the government’s regular land sales.
Regular land sales were in turn scrapped in 2002 because the economic downturn was pushing prices down.
Starting in 2010, the government began selling land again, but on an irregular basis, in an effort to boost supply and cool what were by then rising property prices.
Chan said fewer sites had been triggered under the application list system since 2010 when the government took a more active role in increasing the land supply.
In the 2011-12 financial year, 27 sites were sold through government-initiated sales – by either auction or tender – while only one was triggered by developers.
In the 2012-13 financial year, the government initiated the sales of 22 sites while developers triggered only two.
Chan also said the decision to scrap the land application list system was to allay concerns that land supply would continue to be limited by developers if they were reluctant to trigger auctions.
By scrapping the system, “the government can refer to market demand and maximise efforts to increase the land supply,” he said.
Chan also said that 46 residential sites, including 28 new sites, were included in this year’s list for sale. The sites could provide up to 19,300 flats.