Measures to cool Hong Kong property market won't deter developers

Property firms need to replenish land banks and expect prices for housing sites to remain stable

PUBLISHED : Wednesday, 05 September, 2012, 12:00am
UPDATED : Tuesday, 04 September, 2012, 11:46pm

Developers' appetite for acquiring land will remain strong despite measures by the government to cool the property market, say industry experts.

"[The developers] will continue to be aggressive in bidding for sites in good locations, such as those close to MTR stations," said surveyor Albert So Chun-hin.

There would be no difference in developers' attitudes to land acquisition, he said. "The government is trying to increase land supply. But the fact is there are not many sites available for sale currently, as the government didn't pay attention to developing new areas and replenishing land reserves. So now all they can do is speed up the sale of existing sites," So said.

Quinly Wan Tsz-mei, deputy general manager of K Wah Real Estate, said: "Many of our projects have been completed. We have to replenish the land bank."

Under a government land sales scheme unveiled last Friday - part of measures aiming to increase housing supply - seven housing sites and a commercial site will be released for sale in the last quarter of this year. The housing sites in Tseung Kwan O, Kau To in Sha Tin, Jordan, Tuen Mun, Sai Kung and Tsuen Wan could yield a total of 2,650 flats - but this is 47 per cent less than the 5,000 flats that can be built on sites being offered in the current quarter. And it will be three to four years before the flats become available.

In the medium term, the government will rezone 36 sites from government or social use to residential use. These sites could yield another 11,900 flats.

Developer K Wah International acquired a Tseung Kwan O site for about HK$1.17 billion last month. Before the announcement of the government's new measures, chairman Lui Che-woo said - at a press conference on the group's interim results - that K Wah would continue to buy development sites. This week, Wan said those plans were unchanged by the measures.

Wang On assistant general manager Moni Yeung Kwai-ling said the impact of last week's measures would begin to be felt in the mid- to long term. "We don't see an immediate impact. If there are development sites suitable for us, we are still interested in buying."

Chinachem sales manager Ng Shung-mo said the company would maintain its acquisition plans and he believed land prices would remain stable if land supply increased.

Tseung Kwan O provided an example of price developments, said analysts. The district is one of the main sources of land supply and the government has sold four housing sites in the area since the third quarter of last year.

In February 2010 the accommodation value paid by Sun Hung Kai Properties for a Tseung Kwan O site was HK$4,629 per square foot. Following measures to increase land supply last year, the accommodation values of the sites dropped, but land prices were maintained at a level ranging between HK$3,810 and HK$4,009 per square foot.

"Previously, land prices continued to increase. But now we see that they have stabilised. That is good for the market," said K Wah's Wan.