Hong Kong Government Offering Single Residential Site for Tender This Quarter

The Hong Kong government on Thursday announced plans to offer a single residential site in the New Territories’ Sha Tin district under the city’s quarterly land sale programme.

In the July-September period, which corresponds to the second quarter of Hong Kong’s 2024/25 financial year, the government will sell by tender the site at the junction of Sha Tin Wai and Siu Lek Yuen roads in the Siu Lek Yuen neighbourhood, Development Secretary Bernadette Linn said in a release.

Known as STTL 625, the plot measures 5,652 square metres (60,838 square feet) and can supply 570 homes. In addition, the Urban Renewal Authority plans to tender its development project at Kai Tak and Sa Po roads in Kowloon City, with an expected supply of 810 homes, while three private development and redevelopment projects capable of producing 410 units are seen completing their lease modifications during the quarter.

“Taking all sources of land supply into account, the total private housing land supply in the second quarter of this financial year would support the development of around 1,790 units,” Linn said. “Together with the supply from the first quarter, the total private housing land supply of the first half of this financial year is expected to support some 4,065 units, which is around 30 percent of our annual target of private housing supply (13,200 units).”

Small Measures

The imminent launch of STTL 625 follows the opening of a tender for a smaller Siu Lek Yuen site, dubbed STTL 623, during the calendar second quarter. The 2,425 square metre plot at Yuen Shun Circuit can yield 280 homes across 14,550 square metres of gross floor area. The tender closes at noon on 12 July.

Of the two sites, STTL 625 is farther from City One MTR station and thus its accommodation value is likely to be lower, said Chester Leung, senior director in valuation and advisory services at CBRE Hong Kong.

“Since the scale of both Siu Lek Yuen residential sites is relatively small, the investment amount, development cycle and risks involved is expected to be comparatively low,” Leung said. “We believe both tenders may draw interest from land bidders, including small and medium-sized developers.”

Hong Kong had paused all government sales of commercial and residential land during the January-March period because of weak demand from developers after a string of lacklustre tenders.

In the current quarter, the government will also put up for sale an industrial site in the New Territories’ Hung Shui Kiu area with a land area of 77,700 square metres and a maximum GFA of 544,000 square metres. No commercial sites are scheduled for tender.

Slump Hits New Low

The government’s cautious steps come after May prices at newly launched residential projects slid more than 10 percent below those at similar projects back in 2015, piling pressure on secondary home prices, JLL said in its latest Market Monitor report.

Hong Kong’s secondary home price index gave a reading of 305.9 in May, nearly mirroring the November 2016 level of 306.7, and prices at new residential properties appear to have reverted to levels seen even earlier, according to the consultancy.

Questions about the market outlook have shifted from the sustainability of the rally after the removal of cooling measures to concerns about how much further prices might decline, JLL said.

With May’s primary residential transaction volume dropping to nearly half the April level, pricing of recent project launches continues to surprise the market by reaching new lows, said Cathie Chung, senior director of research at JLL Hong Kong.

“Such will put further pressure on the prices of secondary homes as many people prefer to buy flats at new projects,” Chung said. “The flat owners in the secondary market may need to reduce the asking prices to compete with the new projects and attract buyers.”