Three major local developers regain control of new housing supply

HONG KONG, 7 May 2025 – Developers have adjusted their development strategies in response to changing demand after the housing market entered a downward cycle in 2021, resulting in two major trends. The completion of Class A flats (sized 431 sq ft or below) has increased sharply over the past decade, as small flats offer more guaranteed sales amid economic and property market uncertainties. About 44.5% of total new completions were Class A flats in 2024, with further increases expected this year, according to JLL's latest Hong Kong Residential Sales Market Dynamics released today. Meanwhile, mainland and small to medium-sized local developers have reduced their land acquisitions over the last two years. As a result, three major Hong Kong developers are set to deliver 60% of new residential units completed in 2025-26, reflecting the changing landscape of Hong Kong's residential market.

Figures from JLL Research show that annual completions of Class A flats have skyrocketed from 2,160 units in 2014 (13.7% of total housing supply) to 10,794 units in 2024 (44.5%), reflecting a sharp increase in small flat supply. This trend is set to continue, with 11,065 (53.0%) and 11,553 (57.5%) units slated for delivery in 2025 and 2026, respectively, further increasing the proportion of Class A flats in the market. 

Norry Lee, Senior Director of Projects Strategy and Consultancy Department at JLL in Hong Kong, said: "Escalating US-China trade tensions and tariff disputes have cast a shadow over Hong Kong's economic outlook, deepening the uncertainty in its property market and prompting a surge in risk-averse buyer behaviour. Faced with potential interest rate volatility and macroeconomic instability, prospective buyers are increasingly adopting defensive strategies: either postponing purchases altogether or opting for smaller, more affordable flats—even below their financial means—to hedge against potential depreciation."

"Additionally, the government's reduction of stamp duty on properties priced below HKD 4 million has made small lump-sum units a safer choice in uncertain times. From the perspective of developers, small lump-sum residential units can target a broader customer base and offer more guaranteed sales in the current weak market conditions. It is expected that in the short to medium term, developers will continue to lean towards building small units," he added. 

Mainland and local developers were actively acquiring plots before the market entered the downcycle, resulting in a market full of projects developed by various developers. However, as housing prices have declined over the past three years, most developers are reluctant to acquire sites. Major developers, conversely, still have significant land reserves. This dynamic is leading to a growing concentration of supply among major developers. SHKP, CK Asset, and Henderson Land are projected to deliver 60% of new residential units in 2025–26, a significant increase from below 40% in 2023-24.

Cathie Chung, Senior Director of Research at JLL in Hong Kong, said: "Currently, there are still numerous unsold units from projects developed by other developers. Once these unsold units are gradually absorbed by the market, the situation where the majority of new completions come from the three major developers will become more pronounced. This could support them in strategically phasing the launches of their projects in the medium term. The reduced competition could lower the likelihood of price wars in sought-after areas. Given the uncertain housing market outlook, it is expected that in the short term, developers will continue to be more cautious in land acquisition. The trend of new project completions mainly coming from major developers is likely to persist for the next few years as local large developers have abundant land reserves."