Hong Kong suspends residential, commercial land sales amid sluggish market
Hong Kong Free Press
The Hong Kong government will not sell any residential or commercial land in the current quarter, development minister Bernadette Linn has said, citing weak market sentiment and high vacancy rates.
“In recent months, we have witnessed that the market is not too keen in tendering for residential sites,” she told a press conference on Thursday, citing failed tenders last year. “This is a signal that the government has to take into account.”
Linn told reporters that the government would not offer up sites for tender between January and March, the final quarter of the current financial year, adding that it was the first time in recent years that the government had not put up a private residential site for sale.
“[As] this year’s supply is rather near the annual supply target, as well as the fact that market sentiment [towards] land tenders is rather sluggish recently, the government will not separately put up any residential sites for sale in the fourth quarter,” Linn said on Thursday.
A supply of around 7,960 units in the first three quarters, along with 1,630 expected to complete their lease modifications this quarter, and 1,940 under a starter homes project would provide a total capacity of 11,530 apartments, which Linn said was “rather near the annual supply target” of 12,900.
No commercial sites would be put up for tender either, Linn added, citing high commercial vacancy rates.
Speaking in Cantonese, she told reporters that the government would sell an industrial site in Yuen Long, and would “serve to promote the development of industries and help consolidate brownfield operations in a land-efficient manner.”
Land sales have brought in HK$12.3 billion in revenue this financial year, accounting for around 14.5 per cent of the originally projected HK$85 billion.
See also: Hong Kong gov’t may face larger deficit than expected, as finance chief cites weak land sales
Sino Land, the sole bidder for a plot on Lantau, took the 1.9-hectare parcel at an almost 20 per cent discount, after a record six sites were left unsold.
“It is only right” for the government to be prudent in tendering plots amid weak demand, Linn said.
Midland Realty’s Chief Analyst Buggle Lau told Ming Pao that the lack of land tenders would not have an immediate impact on supply, adding that there were still more than 20,000 unsold units.
But a shortage of tenders could affect land supply and impact the government’s revenue if it persisted, he added.
Lau’s comments came as the housing market continued to struggle, with prices reaching a seven-year low in November, according to the Rating and Valuation Department. According to Centaline’s index, home prices have fallen for seven consecutive weeks.
While transaction volume climbed in December, according to the Land Registry, the volume for the year dropped to a 33-year low amid a 14-year high in interest rates that has left developers cautious.
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