Government allocates three residental land sites for tender in July to Sept quarter, with potential for 1,350 flats

The land supply for the three months to September will be sufficient to build 6,730 flats, about 27 per cent fewer than the previous quarter, as Hong Kong home prices recorded their first weekly fall after rising for 19 consecutive weeks.

Three residential sites spread across Lantau Island, Tai Po and Cheung Sha Wan will be put up for tender in the second quarter of the current financial year, with a total capacity to produce about 1,350 flats, Secretary of Development Eric Ma Siu-cheung said on Friday.

Private developments and redevelopment projects will add an additional 5,380 flats to the supply pipeline. The combined supply of 6,730 flats for the three months to September, is down from the previous quarter’s 9,330 flats.

“The private housing land supply in the first half of 2017-18 has a capacity 16,100 flats, representing about 89 per cent of 2017-18 supply target of 18,000 flats,” Ma said, referring to Hong Kong’s fiscal year ending in March.

The government supplied land for 20,140 new flats last year, which exceeded its initial target of around 18,000 new units by about 12 per cent.

The government also announced that a hotel land site in Cheung Sha Wan will be sold in the second quarter, which will have capacity for 550 hotel rooms.

The land sale announcement comes after Hong Kong home prices suffered their first weekly fall after rising for 19 consecutive weeks, according to data released by Centaline Property Agency on Friday.

Centaline’s latest Centa-City Leading Index, which reflects sales at 100 large housing estates across the city, eased 0.48 point to 159.12 in the week to June 18 from the previous week. Prices in the secondary market have gained 10.3 per cent since January.

Thomas Lam, senior director at Knight Frank said the pace of home price appreciation could soften over the next two months.

“Price growth will narrow a bit,” he said.

Centaline Property Agency projected that the four government land sites could fetch HK$16.6 billion (US$2.13 billion).

Lam expects the residential site at Hong Wah Street West, Cheung Sha Wan would be the most expensive among the residential sites.

He forecasted the site, which yields a total gross floor area of 986,789 sq ft, in Cheung Sha Wan could fetch HK$11.8 billion to HK$13.8 billion, or HK$12,000 per sq ft to HK$14,000 per sq ft.

“It will be sought after as the apartments to be built on the plot will enjoy a full sea view. Competition for this one will be keen as its rare to have a big site in an urban area plus sea view,” he said.

The site is expected to incur an estimated investment of HK$19 billion, he said.

Centaline forecast the hotel site, which is located next to the Cheung Sha Wan residential site, would go for HK$1.38 billion, or HK$5,250 per sq ft. The hotel site will yield a total gross floor area of 262,640 sq ft.

Lam said the incoming chief executive would likely increase government land supply in the coming quarters.

“What the market is most concerned about is the next Chief Executive Carrie Lam Cheng Yuet-ngor’s housing policy,” he said.