Editorial | Affordable homes still the prime goal despite fluctuations in market
- The Hong Kong government cannot sit on its land reserves until the prices pick up again, as a prolonged suspension of supply will cut housing output in the long run
Hong Kong’s property market continues to be clouded with mixed messages. While the government has been spared of another embarrassing failed land tender, the winning price for the prime site in Kai Tak is the lowest in almost a decade.
The outlook is anything but optimistic. To the relief of the government, the plot at the old airport attracted six bidders, confounding pessimism that it would be given the cold shoulder again by major developers.
Also in the fray were Sun Hung Kai Properties, CK Asset Holdings, Wheelock Properties, Nan Fung Group and Henderson Land. But the offer of HK$5.3 billion by a consortium led by Sino Land is the lowest on a per square foot basis in nine years.
The premium was considerably lower compared to the previous tender of HK$8.7 billion by CK Asset for a site nearby in December. Experts said the lower price was within “adjusted” market expectations.
The outcome is perhaps not surprising given the prevailing sentiment. Rising interest rates, a change in the purchase pattern of homebuyers and a lag in the supply pipeline of new flats as a result of the epidemic have added further pressure to the already sluggish market.
Analysts say the bids might also have been dampened by the land sale conditions, which mandate the developer to not just build an underground shopping street and various pedestrian links to proposed public housing developments in the neighbourhood, but also facilities such as a neighbourhood elderly care centre, a hostel for mentally handicapped persons, a day activity centre, a district support centre for persons with disabilities and a boys’ home.