Hong Kong under pressure to meet annual private apartment supply target, faces shortfall of 45 per cent
More allocations for public housing hurt supply in first three quarters
The Hong Kong government is under pressure to meet an annual supply target of 18,000 private apartments this financial year. Land offered for sale in the nine months, or three quarters, since April 1, 2018 will yield fewer than 10,000 units, leaving a shortfall of 45 per cent.
Michael Wong Wai-Lung, the Development Secretary, said on Thursday the government will offer four plots for tender in the October to December period, taking the land supply for new private apartments to 9,840 units so far this financial year.
“The government now prioritises public housing, and this has put pressure on the target for private apartments. But we are trying hard to increase the release of land in the fourth quarter [January to March, 2019] to meet this target,” said Wong.
He said less land was available for private apartments in the October to December period because a residential site at Anderson Road Quarry in Kwun Tong, which could provide 1,160 flats, was reallocated for public housing.
Chief Executive Carrie Lam Cheng Yuet-ngor announced on June 29 that nine government sites – three in Kai Tak and six in Anderson Road Quarry – originally earmarked for private housing had been reallocated for the construction of 10,600 public flats.
“The government is on the right track, increasing the supply of subsidised housing. Developers will have to build private homes on their farmland or redevelop old buildings, as they have to sustain their business,” said Vincent Cheung, deputy managing director, Asia, valuations and advisory services, at Colliers International.
The four plots that will be tendered between October and December – two at Kai Tak and one each in Tai Po and Lantau Island – will have a total capacity of 2,630 units. These sites could fetch the government a total of HK$28.34 billion (US$3.6 billion), according to some surveyors. Together with a fifth plot of land, which will be tendered for commercial use, the government could make HK$36.3 billion, according to analysts.
Taller, higher-density towers are the answer to Hong Kong’s property crisis, say developers and industry groups
Among the four residential sites, Kai Tak Area 4B site 2, is expected to be the most expensive, with a valuation of HK$10.3 billion, or HK$18,000 per square foot. The commercial site, also in Kai Tak, could be worth HK$8 billion.
The planned land sales come as major Hong Kong banks raise their best lending rates, which will translate into higher borrowing costs for homeowners as well as companies.