New stamp duty may lead to fewer old buildings being redeveloped

The imposition of extra stamp duties, which caused a 72 per cent drop last year in developers' purchases of old buildings for redevelopment, will continue to affect the sector this year, property consultants say.

Acquiring old buildings has been one of the ways developers have replenished their land banks over the past four years.

Information from the Lands Tribunal shows applications to trigger auctions of old buildings dropped to just 17 last year, compared with 61 in 2012.

Under the Land [Compulsory Sales for Redevelopment] Ordinance, developers are able to force a compulsory land auction to acquire complete ownership of a building if they already own 80 per cent of it.

Alnwick Chan Chi-hing, head of valuation and professional services at real estate consultancy Knight Frank, said: "I think the applications for compulsory sale will drop a further 30 per cent this year." He expects the firm's business in the sector to decline.

Chan blames the drop on the extra stamp duties. Although one of the measures was only approved by lawmakers last month, and other is awaiting their approval, both duties have been levied since they were announced.