Mainland Chinese developers take redevelopment route to shore up Hong Kong land bank as they fail to win government tenders
- Vanke Property (Hong Kong) was the most active company seeking to redevelop old buildings in Hong Kong in 2018.
Mainland Chinese builders appear to be shifting their Hong Kong land bank strategy by acquiring old buildings for redevelopment, as fierce competition and Beijing’s capital outflow restrictions make it difficult to secure plots in government tenders.
Last year, they submitted 39 compulsory en-bloc sale applications to Hong Kong’s Lands Tribunal, up 160 per cent from 2017, according to JLL’s Residential Sales Market Monitor released on Tuesday.
“As mainland developers are finding it more difficult to win sites in the government land sales market, compulsory sales have become an increasingly attractive source of land supply,” said Henry Mok, senior director of capital markets at JLL.
Chinese developers were able to win just 27 per cent of government land tenders for residential development in 2018 compared to 70 per cent in 2017 despite maintaining a high participation rate in the tenders, he said.
To speed up urban redevelopment, the trigger threshold in the Land (Compulsory Sale for Redevelopment) Ordinance was relaxed in April 2010, allowing developers to force the sale of remaining flats in a building older than 50 years once they had acquired 80 per cent of the units, down from the previous 90 per cent.