Introduction

In a strategic move, the Hong Kong government has announced plans to revive the tender for a residential land plot in Tung Chung following the successful sale of a nearby site by MTR Corp last month. This new initiative marks a significant step in addressing the ongoing housing challenges in the territory.

Plot Details

The plot, which spans 10,648 square meters, has the potential to yield a substantial gross floor area of 37,200 square meters (approximately 400,417 square feet) with plans for around 745 homes. Located on reclaimed waterfront land, the project will be conveniently accessible via the future Tung Chung East MTR station, slated to commence operations in 2029.

Tender Withdrawal

Initially, the government attempted to auction the same Tung Chung Town Lot 55 in November 2023; however, the tender was withdrawn due to disappointing bid amounts. Hannah Jeong, executive director at CBRE Hong Kong, expressed cautious optimism about the upcoming tender, stating, “Given the current residential land market, the bidding price is unlikely to be significantly higher than in 2023.” This leads to uncertainty regarding whether the government will proceed with the sale this time.

Aiming to Boost Housing Supply

The Hong Kong government is exploring this quarter to tender the site, despite it not being listed in the current Land Sale Programme. Officials believe that conditions are favorable after considering recent developments and stakeholder feedback.

Additionally, the local construction market shows promising signs, exemplified by Nan Fung Group winning a tender for an MTR Corp site, surpassing notable competitors such as CK Asset and Sun Hung Kai Properties. The anticipated completion of public housing in the Tung Chung area is also expected to attract more bidders, as it will enhance local amenities and infrastructure.

To make the Town Lot 55 more appealing this time, the government has increased the proposed number of homes from 400 to 750, while lowering the average size of the units. Importantly, no governmental facilities are mandated for construction, and developers benefit from the lack of additional site preparation work, thanks to its reclaimed land status.

CBRE’s Jeong added, “Despite the low price levels, the Tung Chung Extension Area is set to evolve into a significant new town, with a population forecast of 147,200 upon completion, which should draw considerable interest from developers.”

Housing Supply Insights

In parallel, the Urban Renewal Authority is set to launch a project at the intersection of Shantung Street and Thistle Street in Mong Kok, which is expected to bring 340 new homes to the area. Furthermore, two other private redevelopment projects are anticipated to finalize their lease modifications, yielding an additional 13 homes.

“Overall, factoring in all land supply avenues, we estimate that the total private housing land supply for the fourth quarter will support approximately 1,110 units,” stated Development Secretary Bernadette Linn, highlighting the government’s efforts to meet a targeted annual supply of 13,200 units.

Financial Challenges Loom

The government has navigated a challenging financial landscape this year, awarding only two tenders under the Land Sale Programme, both in Sha Tin, at prices totaling over HK$1.6 billion. With only one land parcel slated for tender in the year’s final quarter, analysts warn of potential budgetary strains, raising concerns about the government’s financial health amidst a projected deficit nearing HK$100 billion.

Financial Secretary Paul Chan has characterized the decrease in land revenue as a temporary cycle. He firmly rejected notions that property prices would inevitably decline, suggesting that the market could rebound despite current economic challenges.

Conclusion

In conclusion, the Hong Kong government’s decision to tender the Tung Chung site reflects a proactive approach to tackle the city's housing crisis and stimulate the real estate market. As developers prepare for this opportunity, all eyes will be on how the initial bidding unfolds in a volatile yet hopeful environment.