Hong Kong property

Hong Kong government to slow land sales as it exceeds annual target for supply of new flats

Two sites will be released for tender in the coming three months, but MTR and URA will not provide any more land

PUBLISHED : Monday, 18 December, 2017, 8:56pm
UPDATED : Monday, 18 December, 2017, 11:21pm

Hong Kong’s government will slow the release of land for tender in the coming three months as it has exceeded its target for the supply of new flats this financial year by 35 per cent, the development secretary said on Monday.

Michael Wong said the government will have provided land for 24,300 flats, including land sold by subway operator MTR Corp, the Urban Renewal Authority and private developers, for the financial year ending in March.

“That exceeds the annual target of 18,000 units by 6,300,” he said at a media briefing.

Land at two residential sites, one at the city’s former airport at Kai Tak and the other in the northern area of Tsing Yi, would be released for tender in the next three months, with a total capacity of 1,600 flats. No land will be offered for tender by either MTR Corp, in which the Hong Kong government is the largest stakeholder, or the URA.

Government land sales alone, excluding MTR and URA land, had provided sites for 1,880 flats in the third quarter, for 6,730 in the second and for 8,000 in the first quarter, official data showed.

Property consultants said however that even though the government had exceeded its annual target for land for private flats, there would be limited impact on home prices.

“It will take about three to six years for units built on the land to be put on sale, so it is unlikely to add severe downward pressure on home prices,” said Vincent Cheung, Colliers International’s deputy managing director for Asia valuation and advisory services. He expects home prices to rise a further 10 per cent in 2018.

Hong Kong’s secondary home prices rose for a 19th month in October, making it the world’s least affordable urban centre. Home prices have risen about 11 per cent so far this year, with the sharpest gains seen in tiny flats and luxury homes.

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On Sunday, the city’s finance chief, Paul Chan Mo-po, indicated that boosting the supply of land to ease the city’s housing problems would be a key part of his upcoming budget, through which, he said, he would strive to elevate “people’s sense of being well off”.

Writing in his official blog, Chan said the issue of increasing land supply involved “controversies and misunderstandings” as well as “complicated vested interests”, and the government was determined to tackle these head-on.

He urged people to give the government “full support” so that land supply policies proceeded smoothly.

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The government could generate total land sale revenue of HK$150 billion (US$19.2 billion) for the financial year ending March 31, according to Thomas Lam, senior director at Knight Frank.

He expected the residential site at Kai Tak, named IF Site 1, would fetch HK$17 billion, or HK$12,000 to HK$12,500 per square foot, while the Tsing Yi site could be worth between HK$5.5 billion and HK$6.2 billion, or HK$6,000 to HK$7,000 per square foot.