Hong Kong’s government has surprised the market by announcing that it will not put any residential or commercial sites up for sale through tender in the last quarter of this financial year, the first time it has done so in 14 years.
The decision was made following a poor response to tenders and prevailing market conditions, Bernadette Linn, the secretary for development, said on Thursday.
“[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.
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 10 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.
“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.