“If the situation continues, the government’s deficit will become worse,” Chau said.

“The government has refused to tell the reserve price, and I hope it can reveal the figures. It can increase transparency and facilitate developers in setting their bids.”

It was the second withdrawal of government land this financial year, which will end on March 31 2024.

The city recorded three other tender cancellations between January and March, on land offered by the government, railway operator the MTR Corporation and the Urban Renewal Authority.

The Post calculated the 86 per cent shortfall based on the land income the government has taken in so far this financial year.

Financial Secretary Paul Chan Mo-po last week said the estimated government deficit could double from HK$54.4 billion (US$7 billion) to more than HK$100 billion because of the slow economic recovery, alongside lower income from land premium and stamp duty.

Chan’s February budget predicted an HK$85 billion land premium income, but the government has so far only sold two parcels of land and rejected bids on two more of the 18 slated for sale for HK$7.07 billion.

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About HK$5.02 billion had been generated through land premium income by September, from lease modifications, land exchanges, private treaty grants and lot extensions in the first half of the financial year.

The government’s actual land premium income over the last five financial years only outperformed the estimate in 2021-22, by around 46 per cent.

Land revenue income reached about 60 per cent of the estimate in 2022-23, the worst performance over the five years.

Chau said the present high-interest rate environment had raised development costs and the relaxation of property curbs failed to boost transactions, leading to lower bids from developers. Transactions dropped to a more than seven-year low in October.

He called for scrapping all property curbs to stimulate the market, which could increase home sales and government income from land premium and stamp duties levied on buyers and sellers.

But Lau Chun-kong, the managing director of real estate agency Colliers Hong Kong, said existing property curbs should not shoulder all the blame for the withdrawal of the Tung Chung site.

“The main issue lies in the government, which underestimated the impact of the property restrictions on the site and set a high reserve price,” Lau said. “Land bidders thought there were risks due to the high construction costs and a longer development time frame.

“The bidders were four developers who perform quite well. The government’s reserve price in the future has to be able to reflect different aspects.”

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The Tung Chung site, reclaimed land, amounts to 10,648 square metres (2.63 acres) and is expected to be sufficient for 414 private flats. It attracted bids from companies owned by four major developers in the city.

The offers came from a joint venture by Sino Land and China Merchants Land, Henderson Land, Sun Hung Kai Properties and K. Wah International Holdings.

Lau said that the remote location could add to construction costs and noted the nearest railway station would not be completed until 2029.

Andy Kwan Cheuk-chiu, the director of the ACE Centre for Business and Economic Research, also called for scrapping the remaining property restrictions to boost market confidence and help refill public coffers.

Kwan said the government needed to come up with ways to boost the economy and minimise its deficits.

But he added, with less income generated from land tenders, the premiums paid by developers to build homes using their own land banks could not narrow the gap in expected and actual government revenue.

Kwan said builders would not be motivated to propose new projects if property prices were on a downward trend.