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SCMP Reporter

THE Government has revised its official forecast for private sector supply of mass market flats for this year, reducing the number of units it expects to go on stream, since last year's forecast.

  Owing to a sharp slowdown in construction by developers after the Government announced its cooling measures for the residential sector last year, the Rating & Valuation Department now expects 17.5 per cent fewer small and medium-sized flats to come on stream this year.

  In its Hong Kong Property Review 1994, the Government predicted 28,730 new units would come on stream this year.

  In the 1995 edition, published yesterday, the projected total has dropped to 23,690 flats.

  'This is far less than previously expected and is going to put pressure on rentals,' said property analyst Michael Green, executive director of the Nomura Research Institute.

  'There is huge rental demand in the middle and mass market at the moment.

  'Immigration alone is soaking up 16,000 flats per annum. Divorce takes up another 7,000 to 9,000 units. And that leaves very little for normal buyer and rental demand,' he said.

  Rents for smaller flats were under pressure, rising an average 15 per cent last year, according to the Government's provisional year-end figures.

  The figures released yesterday suggested the tight supply and demand equation could get worse.

  The Rating & Valuation Department predicts the supply of small to medium-sized flats to rise next year, though to a modest 26,070 units.

  About 72 per cent of the supply forecast for this year and the next will be in the New Territories, with almost 10,000 units anticipated in Yuen Long and 7,350 in Sha Tin, over the two years.

  The situation differs in the case of luxury housing.

  Rentals and prices are falling in the private sector and 70 per cent more large flats are scheduled to be complete this year than previously estimated.

  In last year's forecast, the Government estimated the supply of 1,450 new larger units of over 1,764 square feet each this year.

  It now predicts 2,470 units.

  The large supply of luxury units last year was more than twice that of the 1993 production level.

  Again, a significant proportion of this year's supply will be in the New Territories.

  However, next year, should see supply scale down to about 1,200 units. In 1996, the bulk of the supply will be more evenly spread between Hong Kong Island and the New Territories.

  The Rating & Valuation Department projected supply for the office sector, also showed strong revisions.

  It now predicts 26.3 per cent less office space will come on stream this year than earlier forecast.

  Official figures said 4.24 million sq ft of new space would come on stream this year and 5.14 million sq ft, next year.

  The Rating & Valuation Department also warned of a significant rise in annual supply, mostly in the Grade A category.



Supply of flats may drop off