$30b land sales to counter fiscal deficit

Aiden He

Sales of two prime residential sites in Stanley and Kai Tak will be launched during the year's closing quarter, with their combined value of more than HK$30 billion possibly going some way to canceling out the spectacle of Hong Kong recording a fiscal deficit for the 12 months.

The two sites, together with a 537-square-meter plot in Kennedy Town, will offer around 2,500 homes, the Development Bureau announced yesterday.

Lot No 1204 at Cape Road in Stanley, which has a site area of 23,700 square meters that should be good for around 650 luxury homes, is estimated to be worth between HK$13 billion and HK$18.5 billion, or between HK$25,000 and HK$35,000 per square foot.

And the Kai Tak lot - Area 2A Site 4, Site 5(B), and Site 10 - has a total area of 16,029 sq m.

That could accommodate 1,750 flats, with market valuations ranging from HK$16.5 billion to HK$19.5 billion, or from HK$12,000 to HK$14,000 per sq ft.

The Kai Tak plot, which was originally within a commercial site, was up for tender in 2020 but failed to sell as four bids submitted did not meet the reserve price.

The targeted price was to "ensure the government gets a fair and reasonable return in the interest of protecting public revenue," authorities emphasized in a statement back then. Officials later changed the land use for three of the five commercial sites in the area to residential.

The inclusion of the Stanley and Kai Tak sites in the land sale program in the October-December quarter drew speculation that the administration was intending to work on evening up the estimated HK$100 billion financial deficit this year amid the sluggish economy.

Financial Secretary Paul Chan Mo-po said this month that revenue from land premiums for the first five months of this financial year amounted to HK$17.2 billion - far below the annual projected revenue of HK$120 billion.

In response, Secretary for Development Bernadette Linn Hon-ho said yesterday that authorities would never hold on to land until it could be sold at a good price simply to achieve a certain land premium even if plot valuations were lower than government estimates.

Although the current economic environment is uncertain and rising interest rates are putting pressure on the economy and the real estate sector, the government will not slow the pace of land development but will maintain a stable land supply for the market, Linn said.

The three plots, together with phase 1 of the MTR Corp's Oyster Bay/Siu Ho Wan property development, which will offer 1,400 flats, and an Urban Renewal Authority development in Sai Ying Pun plus two private projects are expected to provide around 5,900 private homes, Linn also pointed out.

So the predicted private land supply in the first three quarters of this fiscal year was good for 11,900 homes, she added, which would account for more than 90 percent of the government target for this year.

However, even if the 12,900-flat annual target was reached the average annual housing supply in the past four years will only be 14,300 homes, property agency Midland Realty noted. That was nearly 30 percent less than the annual number from 2015 to 2019.

Authorities will also put another commercial site on Anderson Road in Kwun Tong up for sale, which has a site area of 5,330 sq m.

It is valued at around HK$600 million, or about HK$5,500 per sq ft.

Meanwhile, the re-tendering of a site in Tuen Mun closes at noon today. This is also the biggest piece of land - 33,713 sq m - going for residential use this quarter, offering 2,020 homes.

Its tendering in April was abandoned as five bids submitted by major local developers fell short of the government's reserve price.

The latest valuations for the site have plunged by around 30 percent to HK$6 billion from April, and market watchers said bids might be rejected again amid the recent weak real estate market performance.

Finally, a plot for 410 flats on Kwai Chung's Lai Kong Street will open for tender today.