Hong Kong property developers eye old buildings in prime spots as they hope government will ease compulsory-sale process
- Wheelock won a compulsory auction for a site in Sheung Wan on Monday at the reserve price of HK$529 million (US$67.4 million)
- The government may make compulsory sales easier, as the number of private buildings older than 50 years surged 126 per cent over the past decade
Developers look set to step up efforts to acquire and demolish Hong Kong buildings built more than a half-century ago in prime locations, and the government may help by allowing more compulsory sales amid low land supply and a growing population of aged structures, according to property-market insiders.
Henderson Land Development, New World Development, and Wheelock Properties have been active buyers of ageing properties in recent years, taking advantage of the Land (Compulsory Sale for Redevelopment) Ordinance to acquire and redevelop such properties.
The number of private buildings aged 50 years and above has surged 126 per cent, from 3,900 to 8,600, over the past decade, according government figures. Chief Executive Carrie Lam revealed in her 2021 Policy Address that the government would explore ways to reduce the percentage of a building a developer must own to trigger a compulsory sale of the remainder.
“Compulsory auctions will become more and more important as there is limited new land supply in the city centre, especially for those in prime locations,” said Martin Wong, director and head of research and consultancy for Greater China at Knight Frank.
There could be 16 to 20 applications to acquire old buildings for redevelopment in 2022, according to Knight Frank. As of Monday, eight applications had been made this year, the highest tally since the first half of 2020.
