News release

Compulsory sale applications stay at high level in 2020

Developers remain active in acquiring old buildings under tight land supply

February 03, 2021

HONG KONG, 3 February 2021 - Applications for an order for compulsory sale under Hong Kong's Land (Compulsory Sale for Redevelopment) Ordinance ("Ordinance") remained at a high level in 2020 amid the Covid-19 outbreak, according to JLL's Hong Kong Residential Market Monitor, released today.

The Lands Tribunal received a total of 35 compulsory sale applications in 2020, slightly down from 37 applications in 2019. However, the number of applications remained high for three consecutive years. The Lands Tribunal received an average of 37 applications per year between 2018 and 2020, compared to about 17 applications between 2013 and 2017.

Norry Lee, Senior Director of Projects Strategy and Consultancy department at JLL in Hong Kong, said: "Although the process in assembling sites for redevelopment is lengthy and complicated, we expect the number of applications for compulsory sales to remain as government residential land sales remain constrained and developers have strong interested in developing residential projects."

Since December 2018 when the government reduced the proportion of private housing supply in its 10-year housing supply target to 30% from 40%, the number of residential public land sales had decreased significantly. The lack of land supply problem is worsening in the city with only ten residential sites sold via government tender in 2020, compared to 11 sites each in 2018 and 2019, which is even lower than the 20 to 30 residential sites sold each year between 2014 and 2017.

Nelson Wong, Head of Research at JLL in Greater China, said: "Relative to government land sales, the investment lump-sum in acquiring development sites through compulsory sales is smaller though it tends to take longer to assemble the sites. For small-to-medium developers, they are more engaging in redevelopment via site amalgamation which is considered an effective way to acquire sites as they are less competitive in government's tender compared to the major developers."

No. of Compulsory Sales Application

Sources: JLL, Lands Tribunal

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