The first two residential sites in the "Hong Kong Property for Hong Kong People" scheme are expected to attract keen bids from developers when they go on sale in Kai Tak next week.
The land price could be 30 per cent lower than for comparable lots, however, because flats to be built there can be sold only to Hongkongers, surveyors said.
The Lands Department said yesterday it would accept bids for the two sites from March 28 to May 31.
The land parcels are the first to be launched under the scheme announced by Chief Executive Leung Chun-ying in September as a way to help permanent residents become homeowners.
One of the sites covers an area of 83,646 sq ft and can yield a maximum gross floor area (GFA) of 418,231 sq ft. The winning bidder must build at least 545 homes. The other site covers 92,408 sq ft and can yield GFA of up to 452,794 sq ft. The developer must build at least 600 homes.
The sites could raise between HK$3.87 billion and HK$4.3 billion for the government, surveyors said.
This amount is based on estimates of between HK$4,500 and HK$5,000 per buildable square foot, in terms of GFA, lower than the range of HK$5,000 to HK$6,500 per sq ft without the sales restriction.
"As the restriction will increase the winning developer's risk, [and] as it limits the type of buyers it can sell the flats to and hence the selling price, I think developers will lower their bids by roughly 10 per cent, or more," said Midland Surveyors director Alvin Lam Tsz-pun.
"But the sites are still attractive because they are situated in an urban area along the Sha Tin-to-Central link. They offer a sizeable scale, with about 1,100 units in total, so I think each site will attract five to 10 bids."
Under the scheme, the flats to be built on these sites can be sold only to local permanent residents for the first 30 years. An eligible buyer can jointly own a flat with family members, any of whom may not be a permanent resident.
Corporate buyers, including companies, are banned.
Developers are not allowed to lease out the flats, although buyers can lease their flat to anyone as long as the tenancy does not exceed five years.
Vincent Cheung Kiu-cho, a director at property consultancy Cushman & Wakefield, said the 30-year restriction would have a limited impact on developers, as buying demand should remain strong when the flats were ready for sale in the next five years.
The ban on corporate buyers would also have a limited impact, as they were already deterred by the buyer's stamp duty, Cheung said. And given the location, developers would be unlikely to want to hold the flats for leasing in any case.
Kaizer Lau Ping-cheung, a housing strategy official, expects a keen response from developers due to the strong local demand for housing.