News release

Compulsory sale applications drop 54% y-o-y in 2021

Acquisition of old buildings has become more difficult for private developers

January 06, 2022

HONG KONG, 6 January 2022 – Only 16 compulsory sale applications of aged buildings were submitted to the Lands Tribunal in 2021, according to the JLL's Hong Kong Residential Sales Market Monitor released today.

The number of applications was 54% less than the 35 applications recorded in 2020, also a significant drop from the 2018-2020 three-year average of 37 cases. The significant drop, while partially attributable to the service suspension of courts, indicates that acquisition of aged buildings has become more difficult for private developers.

Norry Lee, Senior Director of Projects Strategy and Consultancy Department at JLL in Hong Kong, said: "The government revealed in the policy address that private buildings aged 50 years and above have surged from 3,900 to 8,600 over the past decade, implying an urgent need to address the aged buildings in a more efficient manner. Acquiring aged buildings for redevelopment has become one of the major sources of land bank replenishment in the urban area for developers in recent years as there were fewer government sites in urban areas released for tender after the sites in Kai Tak. The significant drop in applications implies that the government needs to facilitate the redevelopment procedures of aged buildings."

Nelson Wong, Head of Research at JLL in Greater China, said: "Although the government lowered the application threshold for compulsory sale to 80% from 90% of the undivided shares for specified buildings in 2010, the progress of urban renewal has remained sluggish. We note that some of the practices of other Asian cities may be of reference value for Hong Kong to consider adopting. Heavier incentives for redevelopment projects may facilitate the urban renewal process and regenerate other dilapidated urban areas."

Practices of urban regeneration:

Rewarding bonus plot ratio: In Taipei, there is a bonus system to award additional plot ratio for the regeneration site. The site may be assigned up to 1.5 times of the statutory volume of the floor area, or 0.3 times the statutory capacity of the original building base together with the capacity of the original building.

Relaxing threshold of ownership / owners’ consent percentage: The threshold for redevelopment of eligible buildings stands at 2/3 (66.7%) in Tokyo.

Lowering threshold of building age: In Singapore, buildings aged over 10 years are eligible for collective sale with at least 80% owners' consent, while in Taipei the general designated building age for redevelopment is 30 years. 

Singapore Taipei Tokyo Hong Kong
Requirement – Building age 10 30 N/A 50
Requirement - % of property ownership / owners’ consent 80% 80%[covering at least 80% of the floor area] 66.7% (2/3)[covering at least 2/3 of the floor area] 80%
Plot ratio incentive Yes Yes Yes N/A
*The requirements may vary for buildings of different conditions. The table only covers the common practices.
The requirements do not apply to cases with 100% of owners' consent.

Source: Building and Construction Authority (Singapore), Taipei City Urban Regeneration Office, Tokyo Metropolitan Government, Land (Compulsory Sale for Redevelopment) Ordinance (Hong Kong)

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