Hong Kong government’s tender for five residential plots, including one on The Peak, set to fetch US$3.5b
The Hong Kong government will release five residential plots worth an estimated HK$28 billion (US$3.5 billion) for tender in this quarter, including one on The Peak, which has some of the most expensive property prices in the world.
The planned sale comes after the government announced new measures last week, including reallocating nine government sites for subsidised flats to ease Hong Kong’s housing crisis.
Industry observers said that this would only lead to prices of private homes rising further as supply would be squeezed.
The other sites include two in Kai Tak, and one each in Tuen Mun and Cheung Sha on Lantau Island, Michael Wong Wai-lun, Development Secretary, said on Tuesday.
The five plots will have a total capacity for 1,850 units. And together with land supply from MTR Corp’s tender for Ho Man Tin station, the total supply of private flats will increase to 2,750. However, it would be 16 per cent lower than the land provided for 3,260 units in the first quarter.
Chief Executive Carrie Lam Cheng Yuet-ngor announced on June 29 to reallocate nine government sites – three in Kai Tak and six in Anderson Road Quarry – originally earmarked for private housing to build 10,600 public flats.
The plots on offer for tender are not part of the nine.
It was one of the six measures Lam announced to tackle the city’s long-running housing problems.
Other proposals include flats under the subsidised Home Ownership Scheme (HOS) would be nearly 50 per cent cheaper than private flats, imposing a vacancy tax equivalent to two years’ rental income on empty new flats, inviting the Urban Renewal Authority to build starter homes at Ma Tau Wai and imposing more stringent conditions on developers’ sales of unfinished flats.
Under pressure to provide short-term relief, the government has invited public feedback on 18 proposals to plug a projected shortage of 1,200 hectares of land for housing and economic development in the next three decades.
Lam said on Sunday she felt reclamation was necessary and she reiterated on Tuesday that it was one of the options to increase land supply.
She identified five likely nearshore sites: Lung Kwu Tan in Tuen Mun; Ma Liu Shui in Sha Tin; Siu Ho Wan and Sunny Bay in North Lantau; and Tsing Yi Southwest.
These locations were mapped out by a government consultation as far back as 2011 when Lam was development secretary.
“Creating land by reclamation … outside Victoria Harbour… is [obviously] one of the important land supply options,” she said, adding that the city’s development had always relied on it.
Cusson Leung, head of research for conglomerates and property at JPMorgan, said converting some private residential land for public housing will not lead to lower prices.
“We think both demand and supply for subsidised sale flats will increase while private home prices could see another jump,” he said.
Wong, however, played down the impact of fewer plots for private flats, saying only 1,400 of the estimated 10,600 subsidised flats would be supplied in the financial year ending March 2019, while another 5,400 flats were expected to be rolled out in the financial year ending March 2020.
“The reassigning of land to increase the supply of subsidised housing units will reduce private flats in the short-term. The six measures do not provide more land, and the reassigning functions like a shift from the left hand to the right hand,” Wong said.
“While the pool of available sites to be rolled out for private housing in the short-term will be reduced, the government will, taking into account other land supply sources and market conditions, continue to put up for sale suitable private housing sites in the remaining two quarters to meet the annual target of providing land with a capacity to produce about 18,000 private units.”
Midland Surveyors forecast the luxury residential site on Mansfield Road, The Peak, will fetch as much as HK$9 billion, making it the most valuable plot on offer this quarter.
Dorothy Chow, regional director for valuation at JLL, said developers would be aggressive in bidding for The Peak site, as it is the first government site in the upscale district up for tender since 2006.
“We will not see the land prices for the two Kai Tak sites hit record highs seen for the district as they are far from the MTR station and only have city views,” she added.