Hong Kong government-owned residential sites up for sale to home developers hit 10-year low, but don’t expect impact on property prices
- Finance chief Paul Chan says this year’s land sale programme will contain only 15 residential sites
The number of government-owned sites to be sold to private home developers in the coming financial year will hit a 10-year low, but critics believe the drop will have little impact on the city’s property prices.
Financial Secretary Paul Chan Mo-po said in his budget speech on Wednesday that this year’s land sale programme would contain only 15 residential sites, but he was fast to point out that the sale of a prime commercial site would make up for the loss in government revenue.
Chan also said the government was “financially capable” of pushing forward with a mega reclamation project near Lantau Island to boost the city’s long-term land supply. A HK$500 million (US$64 million) funding request will be tabled to the legislature in March to take forward a feasibility study.
The 15 residential sites for sale this year will be able to provide at least 8,800 private sector flats.
“The number of sites and amount of private residential housing supply will decrease and have an impact on our land revenue,” Chan said. “But this has to be looked at very carefully. Apart from residential sites, we do have quite a substantial number of commercial sites to be put out on the market.”
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One of those commercial sites was on top of the West Kowloon high-speed railway station, he said.
“Apart from quantity, what is also relevant is the location of the sites, the expected market response and expected price they could fetch.”
The West Kowloon plot could be one of the most expensive ever put up for auction, as analysts last year valued the site at between HK$95 billion and HK$142 billion. The upper range of this market estimate is equivalent to the government’s estimated total land revenue for the coming year.
Chan said the supply of private sector flats would remain high in the coming five years, with 18,800 new homes hitting the market each year between 2019 and 2023 on sites sold previously.
The drop in the number of private residential sites for sale is largely due to one of the housing initiatives proposed by Chief Executive Carrie Lam Cheng Yuet-ngor last year, in which she reallocated nine sites originally intended for the private sector.
Railway property projects and the Urban Renewal Authority will add another 6,700 flats to the private market this year.
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Lau Chun-kong, chairman of a land policy panel at the Institute of Surveyors, said the private residential market would continue to shrink until several new town projects in the New Territories were completed in about a decade.
“I believe the impact the reduced supply will have on property prices will be quite minimal,” Lau said. “Hong Kong’s property market is largely affected by people’s expectations about the economic environment, future economic trends, interest rates and investment climate.”
Chinese University of Hong Kong economist Terence Chong Tai-leung also said the decrease in sites would have little impact on property prices, because the government could always reserve urban prime sites for the private sector while using city fringes to build public housing.
Stewart Leung Chi-kin, chairman of the Real Estate Developers Association, urged the government to encourage developers to make use of their own reserves of agricultural land in the New Territories to increase future supply.
Among other initiatives dedicated to housing, Chan also set aside HK$2 billion to support non-governmental organisations building transitional housing. These flats provide temporary relief for Hongkongers stuck in dismal living conditions as they wait for public rental housing.
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Although the government has no set target, the HK$2 billion would be sufficient to provide 4,000 flats, a government source said.
Another HK$22 billion has been earmarked for providing more community facilities on government land, such as elderly care homes, childcare centres and libraries, and to make sure the sites are efficiently used.
The cash injection will go to five or six development projects, with a proposal to develop an ambulance depot near Sheung Wan fire station the earliest. This plan involves eight floors, including an underground car park, parking space for ambulances and other community facilities.
Additional reporting by Tony Cheung
