Six of the nine tenders this year were unsuccessful.
Of the nine projects launched for tender in 2023, six failed to secure bids making 2023 the year with the highest number of failed bids in Hong Kong’s land supply history.
Colliers primarily attributed the failure of these tenders to “the mounting pressures faced by property developers in large-scale development projects.”
“These challenges include subdued demand in the first-hand residential market, a large number of unsold units accumulated by developers, anticipated high supply in the next two to three years, increased capital costs due to rising interest rates, and long development processes which further amplify risk factors. Consequently, bidding enthusiasm among developers has been heavily dampened,” Dorothy Chow, executive director, Asia, Valuation & Advisory Services, at Colliers.
“Furthermore, persistently high mortgage rates coupled with a slower-than-expected economic recovery undoubtedly contributed to the conservative mindset among potential buyers. We foresee that the downward trend in property prices will continue into next year, which will adversely impact land prices as well,” Chow added.
In 2023, only three residential sites were successfully sold: Po Fung Road in Tsuen Wan, Sai Ning Street in Kennedy Town, and Kai Tak Area 2A sites 2 and 3.
Unsuccessful projects include three government-owned residential plots, namely, Cape Road in Stanley, Yau Kom Tau in Tsuen Wan, and Area 106B in Tung Chung.
Oyster Bay Package One, Kwun Tong Town Centre Development Area 4 & 5 Project, and Tung Chung East Station Package One also encountered difficulty securing bids, added Colliers.
Given the failure of most bids in 2023, Colliers said the government will not be able to meet its annual land sale revenue target.
“The initial land sale revenue target for the 2023/24 fiscal year was approximately $85b. However, with only two sites sold, the revenue generated only adds up to approximately $7.1b. Considering the land premium revenue of around $5b obtained previously, the total revenue amounts to approximately $12.1b. This is equivalent to about 14% of the annual target, indicating that it is very unlikely for the target to be met within the remaining timeframe this year.” Kathy Lee, head of Research at Colliers Hong Kong explained.
“The current situation is even more severe compared to the previous fiscal year, when the final revenue reached was approximately $69.9b, accounting for nearly 58% of the annual target of $120b,” Lee added.