Hong Kong halts residential, commercial plot sales in last quarter amid poor response, weak sentiment

The government will not be rolling out any commercial sites for sale either because of high vacancy rates, she added.

Only one plot, an industrial site in Yuen Long, will be put up for tender, Linn said. The 3.2 hectare site has been earmarked for the development of multistorey buildings for modern industries, and is expected to provide floor space of around 160,000 square metres.

Lack of private residential and commercial sites being put up for sale in this quarter cannot “be said to reflect a lack of confidence in the market”, she added.

“We will hold on to our determination to increase planned supply and will continue to provide them to the market for economic and residential developments in a prudent and paced manner.”

A total of 12 projects were launched by the government, the MTR Corporation and the Urban Renewal Authority between January and December 2023. Only five – four residential sites and a commercial parcel – drew enough bids for the tender process to continue.

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“With regard to the sluggish sales performance of residential and commercial projects, together with high vacancy rates of office developments, it’s reasonable for the government to slow down its land sale plan in the remaining quarter of 2023-24,” said Alkan Au, senior director of value and risk advisory at JLL.

The government has been conservative when it comes to residential land sales this financial year. In the first quarter, only two sites were put up for sale.

A subsidiary of Wheelock Properties won the tender for a site at the junction of Sai Ning Street and Victoria Road in Kennedy Town for HK$1.72 billion (US$220 million), according to the Lands Department. The plot is expected to yield about 450 flats, some with a sea view.

The other plot, a 1.05 million sq ft parcel in Yau Kom Tau, has been earmarked for about 2,000 starter homes for middle-class families. A bid submitted by Well Luck, whose parent company is Grand Ming Group Holdings, was rejected as the “tendered premium did not meet the government’s reserve price for the site”. The Hong Kong Housing Society was asked to take on the project.

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The private housing land supply in the fourth quarter is expected to support the development of about 3,570 flats. Eight private development projects will complete their lease modifications in the fourth quarter, providing about 1,630 of these flats in addition to the 1,940 flats coming from the starter homes project in Yau Kom Tau.

The total land supply in the current financial year ending in March is expected to support about 11,530 flats, Linn said. The government had sought to deliver 12,800 flats in this period.

Property transactions in Hong Kong declined to their lowest level in 33 years in 2023, as a poor economic outlook and high interest rates weighed on sentiment. December’s sales figures did, however, show some rebound.

A total of 58,035 properties changed hands in the city last year, a 2.7 per cent drop compared with 2022 and the lowest figure since 1991, according to Land Registry data released on Wednesday.

Home prices fell in November for a seventh month in a row, to their lowest level in almost seven years, according to government data.

Moreover, as of November, only 14.2 per cent of the current financial year’s land premium revenue target was achieved.

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Elsewhere, Wang On Properties released the price list for the first 50 units at its residential project Phoenext in Wong Tai Sin, becoming the first developer to kick off new home sales in 2024.

The units range from studios to two-bedroom flats and are priced from HK$3.38 million to HK$5.77 million after a maximum discount of 30 per cent. The development will have a total of 230 flats.

The first price list is 20 per cent lower than other new developments in Kowloon East. The cheapest flat, a 230 sq ft one-bedroom unit, is priced at HK$14,730 per square foot after discounts.