Hong Kong’s proposed vacancy tax could have this one unintended consequence on home builders

The Hong Kong government’s plan to impose a vacancy tax on property developers who hoard empty, unsold flats could have the unintended consequence of spurring home builders to reclassify some units for the rental market.

Sun Hung Kai Properties (SHKP), which has the biggest hoard of completed flats, said on Sunday it would retain a block of 140 units at its soon-to-be completed project, Victoria Harbour, in North Point for leasing, instead of sale. The announcement reflects a U-turn in the developer’s plan to sell the flats.

Louis Chan Wing-kit, chief executive of residential sales for Asia-Pacific at Centaline Property Agency, said the change was made in response to the government’s proposed vacancy tax.

“It is hard for all units at Victoria Harbour to sell in a short period of time given the high prices,” he said. “Leasing is easier to fill up the block than selling them out.”

Only 68 units, or 19 per cent, of the 355-unit Victoria Harbour have been sold since it was launched in December.

Meanwhile, Donald Choi, chief executive at Chinachem group, said he might consider the possibility of leasing instead of selling some houses because of the lengthy time it would take to find buyers. Chinachem’s upcoming launches include the luxury residential development Jade Grove in So Kwun Wat, Tuen Mun. The project is comprised of 91 houses each with an area of 2,000 square feet.