{"id":364566,"date":"2023-11-20T22:51:08","date_gmt":"2023-11-20T14:51:08","guid":{"rendered":"https:\/\/www.mingtiandi.com\/?p=364566"},"modified":"2023-11-21T22:48:13","modified_gmt":"2023-11-21T14:48:13","slug":"hong-kong-land-sale-failures-reach-new-high","status":"publish","type":"post","link":"https:\/\/www.mingtiandi.com\/real-estate\/research-policy\/hong-kong-land-sale-failures-reach-new-high\/","title":{"rendered":"Hong Kong Residential Tender Failures in Past 22 Months Surpass 2015-2021 Total"},"content":{"rendered":"
\"MTR

MTR\u2019s projects in Hong Kong\u2019s Tung Chung area are facing a tough market<\/p><\/div>\n

The number of failed residential development tenders in Hong Kong over the last 22 months has surpassed that of the previous seven years, according to a report by consultancy JLL.<\/p>\n

The government has withdrawn four residential sites from tenders since the start of 2022, after canceling sales of just three plots from the start of 2015 through 2021, reflecting increasing caution by developers in acquiring land as Hong Kong grapples with sliding home prices and declining housing sales volumes driven by surging mortgage rates and rising economic uncertainty.<\/p>\n

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The market slide persists despite the Hong Kong government\u2019s halving of the Buyer\u2019s Stamp Duty and the New Residential Stamp Duty in October from 15 percent to 7.5 percent, along with other measures, have failed to halt sliding demand and dimming sentiment in the world\u2019s least affordable city for housing.<\/p>\n

“The relaxation of cooling measures did not inject fuel into the property market. Secondary home prices have continued to fall, and the primary market has not seen a resurgence of market activities as expected,\u201d said Norry Lee, senior director of projects strategy and consultancy at JLL in Hong Kong. \u201cThe prevailing market conditions could pose challenges in achieving the long-term private housing land supply target.”<\/p>\n

No Bids<\/h3>\n

More failed tenders are expected as developer sales of new homes have been subdued by soaring mortgage rates on the back of the US Federal Reserve\u2019s interest rate hikes. Prime mortgage rates in the Asian financial centre, which are tied to American policy due to the Hong Kong dollar\u2019s peg to US currency, reached a range of 5.88 to 6.38 percent by the end of September \u2013 the highest since 2007.<\/p>\n

\u201cMajor project launches in the two weeks following the Policy Address only achieved an average first-day sell-through rate of 24.6 percent, compared to 73.9 percent from major project launches in 3Q23,\u201d said Lee. \u201cIf there is no significant improvement in the primary market, developers will continue to give the cold shoulder to the tender.\u201d<\/p>\n

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Norry Lee, senior director of projects strategy and consultancy at JLL in Hong Kong. (Image: JLL Hong Kong)<\/p><\/div>\n

This month alone saw two failed land sales in the Tung Chung area which were expected to yield 1,614 units in total.<\/p>\n

Hong Kong\u2019s MTR Corporation did not receive any offers<\/a> for Package One of its Tung Chung East Station Development project, a residential and retail development near Hong Kong\u2019s International Airport, marking the first time in over a decade that a project by the listed developer and operator of the city\u2019s mass transit system has failed to attract any bids.<\/p>\n

MTR\u2019s failed tender came less than two weeks after Hong Kong\u2019s Lands Department scuttled its fifth attempt to sell a Tung Chung residential site known as Town Lot 55 in Area 106B after all four bids submitted in this latest tender failed to meet the government\u2019s reserve price.<\/p>\n

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In February, MTR withdrew a tender for its Oyster Bay project<\/a> in northern Lantau island after the three bids received for the commercial and residential development fell short of the company\u2019s expectations. During that same month, Hong Kong\u2019s Urban Renewal Authority canceled a tender for a commercial project in Kowloon East\u2019s Kwun Tong area after receiving just one bid for the site.<\/p>\n

In January, a tender for Hong Kong\u2019s first residential plot of 2023 was withdrawn<\/a> as offers from the four bidders for the luxury site in Stanley failed to reach the government\u2019s expectations.<\/p>\n

\u201cMore planning certainty and incentives are necessary to rebuild developers’ confidence, given that the number of unsold units of completed stock has risen to 18,300, the highest level since 2007,\u201d said Cathie Chung, senior director of research at JLL in Hong Kong. \u201cMeanwhile, the government should consider revising the current procedure for land sale by tender and even consider relaunching land sale by auction to enhance the efficiency of the land sale programme.\u201d<\/p>\n

Lacklustre Demand<\/h3>\n

Secondary home sales in Hong Kong fell 23 percent in the third quarter from the previous three months, while October housing transactions declined 29 percent from a year ago, according to statistics from the city\u2019s Land Registry.<\/p>\n

Buyers are staying on the sidelines despite sellers marking down asking prices, with some offering discounts of more than 20 percent below bank valuations, according to JLL. A dearth of mainland Chinese buyers due to tepid economic recovery and a weakened currency on the mainland have also dented demand.<\/p>\n

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Hong Kong\u2019s housing woes have seen the city fall to sixth place in UBS\u2019 global real estate bubble index this year, a sharp decline from 2018 when the investment bank rated Hong Kong as the most over-inflated housing market in the world. After declining 7 percent between mid-2022 and mid-2023, inflation-adjusted house prices in the city are back to levels last seen in 2017, according to the bank.<\/p>\n

JLL expects home prices to decline as much as 5 percent in 2023 and a further 5 percent in 2024.<\/p>\n","protected":false},"excerpt":{"rendered":"

The number of failed residential development tenders in Hong Kong over the last 22 months has surpassed that of the previous seven years, according to a report by consultancy JLL.<\/p>\n

The government has withdrawn four residential sites from tenders since… Read More>><\/a><\/p>\n","protected":false},"author":18333,"featured_media":311468,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[2287],"tags":[5382,5359,694,5795,1671,5391],"ppma_author":[9278],"authors":[{"term_id":9278,"user_id":18333,"is_guest":0,"slug":"kevin-he","display_name":"Kevin He","avatar_url":"https:\/\/secure.gravatar.com\/avatar\/efdb9306ba60ef6852106a81f25dad21?s=96&d=mm&r=g","user_url":"","last_name":"He","first_name":"Kevin","description":""}],"_links":{"self":[{"href":"https:\/\/www.mingtiandi.com\/wp-json\/wp\/v2\/posts\/364566"}],"collection":[{"href":"https:\/\/www.mingtiandi.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.mingtiandi.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.mingtiandi.com\/wp-json\/wp\/v2\/users\/18333"}],"replies":[{"embeddable":true,"href":"https:\/\/www.mingtiandi.com\/wp-json\/wp\/v2\/comments?post=364566"}],"version-history":[{"count":0,"href":"https:\/\/www.mingtiandi.com\/wp-json\/wp\/v2\/posts\/364566\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.mingtiandi.com\/wp-json\/wp\/v2\/media\/311468"}],"wp:attachment":[{"href":"https:\/\/www.mingtiandi.com\/wp-json\/wp\/v2\/media?parent=364566"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.mingtiandi.com\/wp-json\/wp\/v2\/categories?post=364566"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.mingtiandi.com\/wp-json\/wp\/v2\/tags?post=364566"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.mingtiandi.com\/wp-json\/wp\/v2\/ppma_author?post=364566"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}