Combination of Lands Resumption Ordinance, protests will adversely affect Hong Kong developers, analyst says
- Some of Hong Kong’s biggest private developers hold about 100 million sq ft in farmland, one of the easiest sources of new plots
- Henderson Land, city’s second-biggest developer, has the largest holding of 45 million sq ft
Hong Kong, the world’s least affordable housing market, must find ways to provide cheaper housing amid anti-government protests that have now lasted over three months.
Use of the Lands Resumption Ordinance, which allows the city’s government to take back private land for an established public purpose, has been touted in some quarters. As it happens, some of Hong Kong’s biggest private developers hold about 100 million sq ft in farmland, one of the easiest sources of new land in the city.
In a report released last week, Bank of America Merrill Lynch points out Sun Hung Kai Properties, Hong Kong’s biggest developer, had 30 million sq ft of farmland at the end of 2018. Henderson Land Development, the second-biggest, had the largest holding of 45 million sq ft, while CK Asset Holding and New World Development, both in the top 10, had farmland holdings of 9 million sq ft and 16 million sq ft, respectively.
The law has been used before to free up land. Now, as protests have put a spotlight on the lack of affordable housing, the possibility of using it has resurfaced.
If the government succeeded in taking over land of private developers while the protests continue, it would hurt their share prices, said Louis Tse Ming-kwong, managing director of VC Asset Management.
“A combination of the government’s plan to acquire developers’ farmland and the social unrest will have a profound [negative] impact on the share prices of property developers.