Hong Kong land sale

New land sale rule may help to cool Hong Kong’s overheated property market

The government will publish all offers tendered for a plot rather than just winning figure – a move that could curb overly aggressive bidding 

PUBLISHED : Thursday, 01 March, 2018, 10:55pm
UPDATED : Friday, 02 March, 2018, 10:33am

Hong Kong’s land sales are set to become more transparent with the government undertaking to reveal all bids by developers to address long running concerns about inflated prices and their impact on the red hot property market. 

Development Secretary Michael Wong Wai-lun said on Thursday that, starting from this quarter, the government would start publishing the tender amounts from all bidders, without identifying them, four weeks after the winning bid for a plot of land was announced. 

Residential site in Cheung Sha Wan sells for record HK$17.28 billion

On another significant note he also confirmed that the government would launch a new scheme this year requiring private developers to build nursing homes for the elderly on some sites to be sold through government tender, as part of efforts to tackle an ageing population in a space-starved city.

Under the current system, only the winning property developer’s identity and bid price are disclosed, along with a list of other unsuccessful bidders – minus the prices they offered.

“We think it may be a good time to increase transparency of the market,” Wong said. “In the past, there were quite some sites where the winning bid far exceeded the upper estimate of the market. In those situations people wondered whether the winning bid was representative of the overall bids received, or whether it was an outlier, with the second or third highest bid falling far behind.”

One such case was when mainland Chinese conglomerate HNA in November 2016 paid HK$13,500 per square foot for a site in Kai Tak, more than double the price of a similar plot of land sold by government tender in 2014.

Hong Kong’s land sale system by tender has long been criticised as a “black box” operation, especially with prices surging from one record high to the next in recent years. 

A waterfront site in Cheung Sha Wan currently holds the record for the city’s most expensive residential plot after being sold for HK$17.28 billion (US$2.21 billion) last November

An Ap Lei Chau site sold for HK$16.86 billion held that title for nine months before the November sale.

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Industry experts welcomed Thursday’s announcement as means to help cool down expectations in an overspeculated and overheated property market.

“It is a breakthrough in Hong Kong,” said Victor Lai Kin-fai, managing director of Centaline Surveyors. “Under the existing rule of publishing the winning bid only, it sends a false signal that home prices will shoot up once a site gets sold for jaw-dropping prices.

“The change will show different developers’ views about market prospects through their bids. To a certain extent, it will prevent sites being sold for irrationally high prices.”

Rita Wong, head of valuation at JLL Hong Kong, said it was abig step by the government.

“This may have led to very competitive bidding among developers to win sites, resulting in higher expectations of housing price growth,” she said. 

“With the introduction of a new transparent system, showing all the bids, we expect it would avoid overly aggressive bidding on land prices, as the market will have the full picture of developers’ attitudes to land acquisition.”


The development chief revealed details on Thursday of the 27 residential sites the government plans to sell through tender this year.

They will yield about 15, 250 private flats, adding to a total of 25,510 expected to be built in 2018.

Realtors estimated the 27 residential sites, along with another four commercial plots, mostly in Kowloon and the New Territories, could fetch at least HK$170 billion.

“Land revenue in the 2018-19 financial year stands a high chance of smashing the record of the last financial year if the government releases all of them by tender,” said Thomas Lam, a senior director at Knight Frank. 

One of the most valuable sites will be a residential plot in Kai Tak. Centaline Property Agency predicted the 1.83 hectare site would attract a bid of HK$21.6 billion, or HK$18,000 per square foot.

Another luxury site, at Mansfield Road on The Peak could yield a total gross floor area of 94,723 sq ft and fetch HK$7.58 billion, or HK$80,000 per square foot.

“That would be a record in residential prices,” said James Cheung, an executive director at Centaline Surveyors.

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One of the biggest sites on offer is a 3.6 million sq ft commercial plot above the West Kowloon terminal of the Guangzhou-Shenzhen-Hong Kong Express Rail Link. 

John Siu, managing director at Cushman & Wakefield Hong Kong, said the site, which could produce the equivalent of two IFC towers, would trigger fierce bidding among developers. 

“Given its location above the XRL terminal and at the heart of the Kowloon commercial market, the site not only enjoys excellent accessibility but will also help ease the supply shortage in the ICC nearby, which already has a mature base of occupiers of mostly the financial sector,” he said.