Chinese cities experiment with new approach to land sales while Hong Kong sticks with highest-bidder model
- Mainland cities are trying an alternative land sales model designed to keep home prices in check
- Five plots in Shenzhen were sold under a land tender on June 24 that capped prices
Local authorities in many mainland cities are exploring new ways of awarding land to developers as they seek to curb property prices, throwing the spotlight on Hong Kong’s long-established practice of simply picking the highest bidder.
Among the new land sale models, some apply administrative limits on how much developers can charge for completed units as a way to help maintain affordability, while others include requirements for public housing or picking bidders offering close to an average price rather than the highest offer.
As Hong Kong struggles with curbing sky-high property prices – average home prices have jumped 10.4 per cent in the first five months this year – analysts said the city should take a leaf out of the mainland cities’ book.
“Chinese cities are rolling out efficient ways to curb land prices, and eventually homes prices, meanwhile the SAR government has not put proper effort in consultation and studying new methods,” said Hannah Jeong, head of valuation and advisory at Colliers International.
“Hong Kong does not necessarily need to copy the exact approach used by mainland governments, but its needs to scrap the simple way of only selling for highest price.”
Successive record prices at government land sales in Hong Kong have been fuelled by the land sales model which rewards the highest bidder.