The Financial Secretary has announce the Hong Kong SAR 2021-22 Budget today. Please find below response from Hannah Jeong, Head of Valuation & Advisory Services, Colliers International:
- Residential Land Supply:
- The 2021-22 Budget proposes that under the government land sale programme, added with the MTR and URA projects, as well as private development and redevelopment projects, the potential land supply is expected to provide about 16,500 private residential units, which is 800 units higher than the 15,700 residential units proposed last year.
The government will look at the feasibility of rezoning five commercial sites in Kowloon East for residential use, which will provide an estimated additional 5,800 private housing units.
However, looking at experience, not all the proposed sites will be included in the land sale during the fiscal year, hence we believe that the supply-and-demand imbalance housing problem won’t experience much relief in the near future.
- Commercial land supply:
- The government plans to only include three commercial sites for sale in FY2021/2022 which will provide 480,000 sq m commercial area, which is a drop of over 40% compared to the 830,000 sq m with six commercial sites announced last year.
- We are not surprised to see the cut down of commercial site to be released by public land sale this year. In fact, Grade A office sector has been through under correction phase over the last 2 years, with current rental level decreased by over 20% from the 2019 peak. We believe the government will review their land sale strategy according to the market condition, and focus the land sale on residential sector to tackle the long-overdue housing problem, instead of rushing to push out the commercial sites.
- New measures to stimulate industrial investment:
- The Budget mentioned a pilot scheme to charge land premium at “standard rates” in this quarter to encourage redevelopment of industrial buildings. We believe this policy will facilitate the land use planning permission applications process and improve the market transparency.
- This should help to streamline the decision-making process of investors and boost the investment appetite for industrial properties.
- Careful plan needed for transitional housing:
Transitional house utilising hotels and guest houses should be carefully reviewed, especially many existing hotels do not have kitchen facilities and insufficient individual ventilation systems. Conversion will require substantial fire services capex investment from the landlords. We believe the government should carefully study the practicality of this policy and subsidise for the community safety if needed.