How Hong Kong land policies help fuel city’s ever-rising property prices

Hong Kong’s government is on track to post a record haul from selling land to housing and commercial developers in its fiscal year ending March 2018, bolstered by ever-rising prices in the world’s most expensive urban centre.

For the eight months ended November, and with another quarter to go before the close of its fiscal year, the government received HK$90.68 billion from selling 12 pieces of residential and commercial land, a mere HK$19 billion short of the 2016 record of HK$109.5 billion .

That translates in the real world to jaw-dropping prices for land, which have added substantially to developers’ costs, eroding their bottom line. The result is a property industry of ever-higher prices, as builders pass their costs to homebuyers to preserve their profit margin.

“Under high land policy, our land is being used to build pricey apartments that are beyond the affordability of the general public,” said Christopher Law, founding director of Oval Partnership, a Hong Kong architecture firm. “Units are shrinking to the size of shoe boxes. Experience tells us that what we are building flats for investors to speculate on, and gamble for asset inflation, with no benefit to the city.”