2024-05-17 28Hse Editor
To implement the 2022 Policy Address's Private Subsidised Sale Flat Pilot Scheme, the government recently opened a public tender for a plot in Cheung Man Road, Chai Wan, inviting developers to bid for construction of subsidised housing units. The deadline for bids is July 19.
The plot in question is located at Lot No. 185 in Chai Wan, covering an area of approximately 56,100 square feet. It is designated for non-industrial use (excluding warehouses, hotels, and gas stations) and, if used for private residential purposes, the minimum and maximum gross floor areas are approximately 323,100 and 448,900 square feet, respectively.
According to the terms of the land sale, the project must be completed by the end of September 2030. Developers must provide at least 700 residential units, all with a minimum salable floor area of 280 square feet (26 square meters), and at least 70% of the units must have a usable area of no less than 375 square feet (34.8 square meters).
The conditions also include the construction of a day care center for the elderly and office space for a frail elderly home care service team, as well as the responsibility for building elevated pedestrian bridges and leveling roads. To ensure quality, developers must hire independent parties to inspect the building and submit a report, and they are also responsible for construction, mortgage arrangements, and sales.
Moreover, the winning contractor must sell all units within a specified time frame at 65% of the market price, with eligibility and resale restrictions following current public housing regulations. If there are any units left, the developer can sell them as private residences after completing the payment for land premiums.
2023 saw the highest number of land auction failures in Hong Kong's history. Entering 2024, the Financial Secretary Paul Chan announced a full withdrawal of market cooling measures, improving the atmosphere in the real estate market. The government's decision to release land in the Hong Kong Island region prompts the question: will it attract developers to bid?
While it is challenging to predict outcomes, the current lukewarm public housing sales and the poor initial response to the selection of units in eResidence Tower 3 suggest that developers will be more cautious in their bidding, even with the positive news of cooling measures being lifted.
Additionally, although the Cheung Man Road site is urban and near the Chai Wan MTR station, making it conveniently accessible, its sloped nature involves complex engineering challenges that raise construction costs and influence developers' bidding decisions.
Nevertheless, to increase developers' bidding interest and reduce the chance of failed auctions, the government has set the tender period for this project at 16 weeks, longer than the usual four to six weeks for private residential land. This allows developers more time to understand the tender conditions and the complexity of the building, as well as to calculate the land valuation and profit margins.
The real estate market is unpredictable, and each developer has their own investment strategy and perspective on individual plots. Since this project is being introduced for the first time, developers might approach it conservatively and cautiously, or they may adopt a more open attitude. The outlook, however, does not seem optimistic, and the government may need to be prepared for both possibilities.
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