Hong Kong’s government on Wednesday released a fiscal 2022-23 budget promising to increase land sales for housing and commercial development and tap cash reserves to jump-start infrastructure works within the planned Northern Metropolis.
In an announcement shadowed by the city’s ongoing surge in COVID-19 cases, finance secretary Paul Chan said the 2022-23 Land Sale Programme would offer 13 residential sites and four commercial sites providing 8,000 residential units and 300,000 square metres (3.2 million square feet) of commercial floor area, respectively.
“With the residential sites under the Land Sale Programme, together with railway property development, private development and redevelopment projects as well as the Urban Renewal Authority’s projects, the potential land supply for the whole year is expected to have a capacity of providing about 18,000 units,” Chan said.
In the short to medium term, the government aims to secure 103 hectares (254.5 acres) of land for private housing in the coming five years and make available sites for the production of over 57,000 units through land sales or putting up railway property developments for tender.
Rita Wong, CBRE’s head of valuation and consulting for Greater China, welcomed the government’s efforts to increase land supply through multiple channels.
“This year, the government is offering more sites for residential properties, 14 percent more compared to the previous three-year average, showing its determination to increase home supply,” Wong said.
Government land supply will account for 44 percent of the target in this year’s Land Sale Programme, compared with 36 percent in last year’s, which could lead to higher certainty of delivery, according to an analysis prepared by Marcos Chan, CBRE Hong Kong’s head of research.
A more sceptical view came from Hannah Jeong, head of valuation and advisory services at Colliers Hong Kong, who noted that the 2021-22 Land Sale Programme’s 15 residential government sites included eight new sites and seven rolled over from the previous fiscal year.
“Among those, only seven have been sold or are scheduled to be sold by March 2022, meaning the government has met less than 50 percent of their KPI,” Jeong said. “Therefore even if the 2022-23 budget mentioned a total of 13 residential sites to be launched, we believe that they will not be fully tendered out to the market and therefore it’ll be difficult to meet the 8,000 units supply target.”
Eyes on the Future
The government also vowed to set aside $100 billion from the cumulative return of the Future Fund to set up a dedicated fund under the Capital Works Reserve Fund in order to expedite infrastructure works related to land, housing and transport within the Northern Metropolis, the development initiative for the New Territories announced by chief executive Carrie Lam in her policy address last October.
Studies related to Lantau Tomorrow, a plan to increase living space by creating artificial islands, commenced last June and preliminary proposals will be put forward in the fourth quarter of this year, according to the budget.
“Regarding the policies about Northern Metropolis and Tomorrow Lantau released in the budget, it reflected the government is trying to execute the developments via the policies and financial measures,” said Nelson Wong, head of research for Greater China at JLL. “It could help to speed up the long-term land supply.”
To provide relief during the latest COVID emergency, some small and medium-sized businesses will be allowed to defer rent payments by three months, with the possibility of an extension for the same duration.
The government also proposed charging a progressively higher property tax rate on about 42,000 of Hong Kong’s most expensive homes, a policy bound to affect wealthy owners and landlords of multiple properties.