Hong Kong Private Housing Completions to Drop 44% Over Three-Year Period: JLL

Annual completions of private housing in Hong Kong for the three years of 2026-28 are expected to fall 44 percent compared with those in 2023-25, according to a JLL forecast.

Declining homebuyer interest and pressure on builders from high interest rates have had a tangible effect on property development in the Asian financial hub, the consultancy said in its latest Market Monitor report on Hong Kong’s residential sector, with the government, which collected more than 20 percent of its revenue from land sales in the 2021/22 fiscal year, having cut back on site auctions to keep prices stable.

“As government land sale contributions wane, the number of new private residential units projected to be yielded from government land sales in the first three quarters of the 2023/24 financial year is a mere 1,775,” said Norry Lee, senior director of projects strategy and consultancy at JLL in Hong Kong.

The figure amounts to less than one-quarter of the norm, as the preceding decade’s average was 7,432 a year, Lee said.

Waiting for the Rebound

Redevelopment of old districts accounted for more than half of estimated units from private housing supply in the 2022/23 financial year, with the number of compulsory sale applications tumbling from an annual average of 29 in the previous three years to 22 in 2022 and just four during the first nine months of 2023.

JLL cited government data showing a sharp drop in domestic units commencing construction, from 21,495 in 2020 to 12,254 in 2022. Figures from the first nine months of 2023 revealed a slight increase to 13,378 units — still far from the expected rebound after the COVID pandemic delayed some projects in 2022, the agency said.

Comparing the period from 2019 to September 2023 with the preceding five years, JLL noted a deficit of 13,705 units, implying fewer completions in the years to come.

The slowdown is noticeable at every stage of the residential development lifecycle — from land sales to the start of construction — and is anticipated to persist given the dim outlook for home prices, said Cathie Chung, senior director of research at JLL in Hong Kong.

“We believe more demand-side supportive measures are necessary to bring the housing supply mechanism back on track,” Chung said.

Approvals Slow

JLL also pointed to a decline in gross floor area from building plans approved, which could mean fewer residential units beginning construction in the next few years. For the first nine months of 2023, GFA of new private residential building plans approved was just 55 percent of 2022 levels and 49 percent of the annual average from 2019 to 2022.

Projects obtaining building plan approval will typically commence construction after one or two years, JLL said.

According to the consultancy, government land sales had achieved just 14.2 percent of the 2023/24 financial year’s land premium revenue target of HK$85 billion ($10.9 billion) as of November.

Six sites were withdrawn after receiving no bids or insufficient bids. Only one tender was awarded during the fourth quarter of 2023, for a far-flung Lantau Island site won by Sino Land.