Hong Kong faces HK$10 billion potential shortfall in land sales revenue as city faces first fiscal deficit in 15 years
- Five analysts predict a shortfall against budget estimate, while one expects collection to surpass city’s target, according to a Post survey this month
- Financial Secretary Chan says reduced revenue affects resources for public services, hurts minorities most
Hong Kong is likely to miss its target of collecting HK$143 billion (US$18.3 billion) from land sales and premium revenue in the current financial year to March 31, likely contributing to the city’s first budget deficit in 15 years.
The government has generated HK$113.8 billion of such revenue between April 1 and December 18, 2019, according to calculations based on Lands Department records. Land sales earmarked for the rest of current year could only possibly raise the tally to about HK$133 billion, analysts said.
Five analysts expected a shortfall against the budgeted figure, while one expect collection to surpass the target, according to a survey conducted by the South China Morning Post last week.
Hong Kong raised this year’s land sales and premium target by 22 per cent to HK$143 billion, a level that has come under severe pressure since June when anti-government protests gathered momentum and occasionally turned violent. The beleaguered economy fell into a technical recession in the third quarter, and Financial Secretary Paul Chan Mo-po said its first fiscal deficit since 2004 is “unavoidable.”
Revenue will be “slightly lower than the budget estimate since some parcels of land were withdrawn from sale,” said Thomas Lam, an executive director at Knight Frank, who sees a likely outcome of HK$130 billion to HK$135 billion. “Market sentiment in the recent six months has been lacklustre, transaction prices were lower and the number of premium cases were also lower.”