Hong Kong halts residential, commercial land sales in weak market
THE Hong Kong government is not selling any residential or commercial land plots in the first quarter of the year, as weak market sentiment dampens developer demand.
“In recent months, we have witnessed that the market is not too keen in tendering for residential sites,” Secretary for Development Bernadette Linn said in a press conference on Thursday (Jan 4). There were failed tenders and the recent successful tender had only one bid, she added.
There will be a supply of 11,530 new homes in the financial year ending in March, close to the government’s annual target, Linn said. It’s the first time in recent years for the government to not sell any residential plots, according to Linn.
The government is also not auctioning commercial sites, continuing the same decision made in the previous quarter, as office vacancies remains high. The city saw a record 16.4 per cent of empty office space at the end of last year, according to CBRE Group.
Hong Kong only sold one-third of land plots in public tenders in the first 11 months, a record for failed bids. The six sites left unsold were mostly residential plots.
High interest rates and rising construction costs have deterred builders from acquiring land.
The sluggish land market has hurt the government coffers. It generated just HK$12.3 billion (S$2.1 billion) land revenue in the current fiscal year ending in March, representing 14 per cent of the annual target. Land sales have long been a major source of income for the financial hub to maintain a low tax system. At its peak, the government brought in HK$165 billion from land sales in the 2017 fiscal year. BLOOMBERG
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