‘Outrageous’ laments analyst, as Hong Kong government land sale revenue surges to HK$52.84b
Government land sales have become a ‘battlefield’ between local and mainland developers, one analyst says. Revenue since April has exceeded the full year result for fiscal 2015 by 22 per cent
Hong Kong government land sale revenue by tender has reached HK$52.84 billion for the seven months to November 16, up 22 per cent from the full year figure for 2015 as fierce competition drove up land prices.
For the financial year ended March 31, 2015, the government had generated land sale revenue of HK$43.31 billion, according to Lands Department data.
“The land sale figure is outrageous,” said Vincent Cheung Kiu-cho, executive director of valuation and advisory services Asia at Colliers International. “Hong Kong’s land market is turning into a battlefield among mainland developers. Their aggressive bids have lifted land prices to a new height.”
But he believes the introduction of a 15 per cent stamp duty for all residential purchases in early November, except for first-time buyers, and an imminent interest rate rise in the US next month is unlikely to dampen developer interest.
Denis Ma, head of research for Hong Kong at JLL said the spectacular land sale figure was partly driven by local developers eager to expand their land banks.
“Local developers had turned aggressive for land replenishment. Previously, locals have lost out to mainland rivals but they are catching up now,” he said.
Although mainland buyers have won only five out of the 25 government land tenders so far this financial year, their participation rate was 56 per cent compare to 43 per cent last year, said Ma.
“Their presence and willingness to submit aggressive bids has been one of the reasons why local developers have likely increased bid offers,” he said, noting mainland developers had participated in 14 of the 25 government tenders.
Most sites had sold at either a record price or at least 20 per cent above market consensus, once buying sentiment improved in the wake of the Brexit vote and the US Federal Reserve’s decision in June to leave interest rates unchanged.
Earlier in November, a residential site known as Area 1K Site 3 in the Kai Tak area, home to the decommissioned Hong Kong International Airport, sold to HNA for a whopping HK$8.83 billion.
In September, a luxury residential site in Beacon Hill, Kowloon Tong was awarded to Kerry Properties for HK$7.26 billion, or HK$21,016 per sq ft, setting a record on a per square foot basis in Kowloon Tong.
Ma said there are 23 sites on the government’s 2016/17 land sale programme that have yet to be sold. These include two Kai Tak sites (known as NKIL 6557 and NKIL 6562) along with the Murray Road Carpark in Central, which is expected to be offer for sale in the first quarter of 2017. Ma said the two sites could fetch over HK$ 26 billion.
“It will see the government land sale revenue estimates for financial year 2016/17 being exceeded,” he said.
Financial Secretary John Tsang Chun-wah said in February land sale revenue for the financial year ended March 31 would be HK$67 billion.