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Government’s residential sites acquired by top 7 developers decreased by 50% in five years.
Hong Kong, 28 February 2017 – PRC developers' growing involvement in the Hong Kong residential market and strong appetite of small-to-mid-sized local developers has seen the share of influence of top local heavyweights decrease over the past five years, according to JLL's latest Hong Kong Residential Sales Market report released today.
JLL figures show the percentage of residential development sites won by seven major developers in Hong Kong, namely Sun Hung Kai Properties, Cheung Kong Property, Henderson Land, Nan Fung Group, New World Development, Sino Land and Wheelock Properties in the public land sales market has shrunk steadily from 45% in 2012, to 28% in 2014 and 22% in 2016. Most recently, these developers have also missed the bid on land sale tenders via MTRC and Urban Renewal Authority sources to newcomers.
From a supply perspective, the seven developers would expect their share of total private completions decrease to 53% between 2017 and 2019, from 84% in 2014 and 77% in 2016, based on our records.
Henry Mok, regional director of capital markets at JLL, said: "The seven heavyweight developers won only five residential sites in the government public land sales market last year, compared with 10 sites in 2012. The tender of MTRC projects, usually with larger development scale, has also seen their level of influence decrease. Looking ahead, their contribution to future housing supply is expected to fall. From our understanding, the heavyweight developers have already raised their offers in land bidding, despite still falling short of the winning bids. Given difficulties in replenishing their land bank, major developers may turn to selling the new flats at higher prices, at the expense of sales volume. We expect asking prices of new projects to remain firm."
"With mainland's cooling measures in property market still in place, mainland developers will continue to look for development opportunities in Hong Kong, even if they need to pay a premium for a plot," he added.
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