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Hong Kong’s second-quarter residential land tenders set to fuel bidding war amid supply squeeze
- Only two small parcels will be up for grabs in the quarter starting July 1 as land supply constraint persists
- Other corporation, agencies to supplement bigger plots to help meet city’s target of 5,400 flats in the current quarter
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Hong Kong’s failure to provide sufficient land for private housing is expected to keep competition alive among small and medium-sized developers in this quarter’s land-sale programme, just as the city’s property market is turning rosy again.
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The government will offer two parcels of land for public tender in the July-to-September quarter, enough to provide only 200 flats in an under-supplied housing market. The plots at Kowloon Tong and Yuen Long could see keen bidding, with one analyst raising his valuation of the former piece by 36 per cent amid bullish sentiment.
The widespread vaccination programme, positive market atmosphere and the brisk sales in the market “will enhance confidence and desire to invest” among developers, said James Cheung, executive director at Centaline Surveyors. “The response to land bidding will be enthusiastic.”
The land sales come as the city’s economy emerged from its worst recession on record with a 7.9 per cent expansion in the first quarter while retail sales rebounded. Prices of lived-in homes have rallied this year to within 0.8 per cent of the record-high in May 2019, with some analysts predicting a 5 to 10 per cent jump for 2021.
The 200 flats from the tenders represent only 4 per cent of the total supply of 5,400 units targeted in the quarter, and is less than the average number of flats in one building block within the Kingswood Villas project in Tin Shui Wai. The other 96 per cent of land supply will be provided by MTR Corporation, the Urban Renewal Authority (URA) and private developers.
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Centaline Surveyors last week raised its valuation of the plot in Kowloon Tong at 79 Broadcast Drive by 36.6 per cent, to about HK$1.07 billion (US$137.7 million) or HK$15,000 per square foot, citing the scarcity factor and improving market sentiment.
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