Farmland conversion plan to benefit major homebuilders
A proposed plan to convert farmland in the New Territories held by private developers into residential developments, if implemented, is likely to benefit large agricultural land owners.
HONG KONG, 08 January 2018 – A proposed plan to convert farmland in the New Territories held by private developers into residential developments, if implemented, is likely to benefit large agricultural land owners, namely Henderson Land, Sun Hung Kai Properties, New World Development and CK Asset Holdings, according to JLL's latest Hong Kong Residential Sales Market Monitor report released today.
With a view to easing housing demand in the short to medium term, the Task Force on Land Supply has suggested to convert privately-owned idle farmland in the New Territories for residential development in order to increase housing supply. The proposal will be open for public consultation this year.
Sun Hung Kai Properties was said to have been fast to react, having recently reached an agreement with the government to build 4,700 residential units on converted agricultural land at Shap Sze Heung, Sai Kung upon payment of a record-high land premium amounting to HKD15.9 billion.
Ingrid Cheh, Associate Director of Research at JLL, said: "Local developers generally hold an optimistic outlook of the market, with four out of the five residential sites sold via government tender snapped up by local bidders in the second half of 2017. Those with fewer or no agricultural land holdings were particularly active in land bidding, so as to replenish their land bank. Sino Land, for instance, won two sites in the public land sales market, including a residential site in Cheung Sha Wan in a joint-venture with Shimao Property, Wheelock Properties, K Wah International and SEA Holdings for HKD17.3 billion, a record high for residential land sites sold via government tender."
Henry Mok, Regional Director of Capital Markets at JLL, said: "Local developers turned active in the second half of last year, which shows they are optimistic on the market outlook and willing to pay aggressive prices in land bidding. With land prices at elevated levels, we expect local and mainland developers will continue to join handsin land bidding to increase the chances of winning and diversify investment risk."
Separately, JLL figures show that the JLL Mass Residential Index has increased 15.3% for the full year in 2017, the fastest pace of growth since 2012.
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