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.
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.”
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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.
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.
That parcel can accommodate up to 180 units and is likely to be favoured by many developers, especially among small and medium-sized players, according to Midland Surveyors.
The other plot in Yuen Long – at the junction of Lau Yip Street and Chung Yip Road and about 13 minutes’ walk from the Long Ping Station – can only accommodate 20 to 30 villas. Its size is certain to attract small to medium-sized developers based on a low estimated valuation of HK$390 million, Centaline Surveyors said.
Recent heated competition in small land tenders underpins that observation. For instance, the residential parcel in Fanling that Wing Tai Properties won on June 30 attracted as many as 17 bids.
The tight supply conditions in Hong Kong are unlikely to ease until the later years of this decade when more land from new townships becomes available, said Ryan Ip, head of land and housing research at local think tank Our Hong Kong Foundation. New Territories and Lantau island reclamation project are key in planning the next generation of new towns, he added.
“We hope [the government] will increase its efforts to increase its residential land to stabilise future supply,” said Buggle Lau, chief analyst at Midland Realty.
Apart from the government tenders in the current quarter, the URA project in To Kwa Wan will be the focus because of its size, according to Midland Surveyors. The project near Bailey Street and Wing Kwong Street will provide 1,150 flats and has attracted the interest of 36 potential bidders.
“Due to the large scale of the project, which is rare in recent years, and benefiting from the traffic advantage of the Tuen Ma Line, the project is likely to be favoured by developers,” said Alvin Lam, director at Midland Surveyors. “It is likely to be a parcel worth nearly HK$10 billion, attracting large-scale developers and consortiums.”
MTR Corp’s Tung Chung project, at the traction substation next to the Caribbean Coast development, can accommodate some 1,600 flats. It is about 20 minutes’ walk from the Tung Chung railway station.
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