News release

Surge in withdrawn tenders since 2022 outpaces previous 7-year total

Average first-day sell-through rate reaches 24.6% only after cooling measures relaxation

November 16, 2023

Yvonne Liu

Public Relations Director, Hong Kong and Macao
+852 2846 5264

HONG KONG, November. 16, 2023 – The number of residential sites withdrawn from the government tender in 2022 and year-to-date 2023 has already surpassed that of the previous seven years (between 2015 and 2021), according to JLL's latest Residential Market Monitor released today. Such reflects that the developers are losing their appetite for land acquisition. We expect this trend will continue and more sites will be withdrawn from the tender as the sales in the primary market failed to improve after the government relaxed the cooling measures. The average first-day sell-through rate of major projects launched in the two weeks following the Policy Address was 24.6% only.

A total of four residential sites withdrew from the government tender since 2022, more than the total amount of three sites in the previous seven years. The land prices have also dropped significantly. Recently, two residential sites in Tung Chung, Area 106B and Package 1 of Tung Chung East Station, which could yield a total of 1,614 units, withdrew from the tender. The bid prices for the site in Area 106B could indicate the achievable accommodation value range for future land supply in the Northern Metropolis. Tung Chung and the Northern Metropolis both adopted infrastructure-led planning, however, residential sites in Tung Chung did not gain enough appeal despite having larger railway capacities for potential population growth than some of the proposed development areas in the Northern Metropolis.

Norry Lee, Senior Director of Projects Strategy and Consultancy Department at JLL in Hong Kong, said: "The relaxation of cooling measures did not inject fuel into the property market. Secondary home prices have continued to fall, and the primary market has not seen a resurgence of market activities as expected.

Major project launches in the two weeks following the Policy Address only achieved an average first-day sell-through rate of 24.6%, compared to 73.9% from major project launches in 3Q23. If there is no significant improvement in the primary market, developers will continue to give the cold shoulder to the tender. The prevailing market conditions could pose challenges in achieving the long-term private housing land supply target."

In the recently published Northern Metropolis Action Agenda, the government elaborated on the planning details and schedules of housing supply and major infrastructure projects across the four major zones of the Northern Metropolis. The Northern Metropolis can provide more than 3,000 hectares of new development land, of which about 1,400 hectares can be developed within 10 years, providing over 500,000 new housing units. These land-creation initiatives are critical for the city's long-term growth. Developing more land in the Northern Metropolis could enhance Hong Kong's competitiveness, decrease real estate costs, increase the city's appeal to foreign talents and businesses, make housing more affordable, and improve the living standards for those in need. It could also enhance the government's flexibility in managing real estate supply as needed. The major concern is it might take longer than the proposed timelinefor the government to achieve the target if the property market remains weak.

Cathie Chung, Senior Director of Research at JLL in Hong Kong, said: "Although the government is trying to attract non-local talents, which may boost the housing supply, the talent inflow would not ease the property market's challenges. Without a rapid expansion of job openings, the rate of non-local talents' departure could match that of their arrival. Also, more planning certainty and incentives are necessary to rebuild developers' confidence, given that the number of unsold units of completed stock has risen to 18,300, the highest level since 2007. Meanwhile, the government should consider revising the current procedure for land sale by tender and even consider relaunching land sale by auction to enhance the efficiency of the land sale programme."

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