《Hong Kong Lou》Gao Li: For the new season, it will roll out a pragmatic land strategy and align closely with market demand; the market response to the small- and mid-sized residential land plots in Ho Man Tin is positive

In response to the government’s latest land sale plan, Gaolai Hong Kong Research Department and retail advisory head Li Wan-yin said the land-selling atmosphere was good in the last quarter, and the new season of land supply will be pragmatic and closely aligned with the market.

Looking back at the previous quarter, the Hong Kong land auction market showed a good rebound trend. Developers’ enthusiasm for bidding increased. In the New Territories, the land plot in Area 106A in Tung Chung received 6 bids, with the winning bid price exceeding $1.6 billion; the floor price was over $3,000 per sq ft, and the land price revenue performance was ideal.

Overall, over the next five years since this year, the average annual completion of private residential units is about 17,000. Compared with last year’s full-year primary residential transaction volume (20,500 deals), this is a level that the market can digest healthily. In addition, the government continues to pause the sale of commercial land in line with the current realities of the commercial market, and actively explores converting some commercial land into student halls for tertiary education. This fully reflects the government’s ability to accurately capture market pulse and make timely adjustments according to market absorption capacity and demand.

The acting head of the Hong Kong Rating and Valuation Department, Zeng Zhipeng, said that the scale of small- and medium-sized plots is appropriate, and the expectation is for a positive response to tenders. In the latest quarter (July to September), the government will put up for tender a small- and medium-sized residential site on Foxiang Street in Ho Man Tin, Kowloon. The project has just completed rezoning. It is located in a mature residential community and near the Ho Man Tin MTR Station.

Although the winning consortium will need to allocate a small portion of the gross floor area to build social welfare facilities, the project will only provide about 250 units, with a moderate scale. Premium plots within the urban core have always been attractive; and the relatively lower investment scale means lower capital investment requirements, which is expected to attract a wider range of market participants. A positive response to the tender is anticipated.

It is believed that by only launching one residential land plot this quarter, the government has fully factored in the large amount of new supply that is about to arrive under “one railway plus one bureau,” i.e., the forthcoming initiatives. The main housing supply this quarter will come from Phase 2 of Station Area 16 in the MTR Tuen Mun South Extension (involving 5,510 units), and the tender project on Bei Lei Street launched by the URA at the start of the quarter (1,220 units). Together with the 3 residential land plots in the Hung Shui Kiu area for which the tender deadline just passed (3,210 units), the potential supply in the second quarter will be as high as 10,190 units. In total, the housing supply in the first half of this financial year has already reached 12,430 units, extremely close to the full-year supply target.

As the firm pointed out earlier, the government’s timely move to loosen restrictions on the terms for land sales can effectively unlock land value. With the Ho Man Tin plot officially put on the market, the remaining 4 residential land plots listed in the land sale schedule (including two plots in Shek Mun, Shatin, the Clearwater Bay Road project in Sai Kung, and the Hang Kok Road project in Repulse Bay) also have moderate scale or scarce advantages associated with traditional luxury residential locations. As long as the government continues to keep flexibility in land sale terms and increases development flexibility for projects, it is believed these plots can be successfully awarded, bringing stable land sale revenue to the treasury. (da/u)