Hong Kong's Budget 2014 predicts land supply to balloon to 20,000

Will land costs drop?

According to Barclays, while it may be just prudent budgeting, the FY 2014-15 Budget forecasts a drop in land sale revenues from FY2013-14’s HK$84.1bn to HK$70bn, implying potentially lower land costs to come.

The Government expects to sell 34 sites capable of producing 15,500 units (14,000 units in FY2014-15) plus seven commercial sites and one hotel site. Including other sources of land supply, it expects to increase land supply from last year’s 18,000 units to hit its target of 20,000 units in FY2014-15.

Here’s more from Barclays:

In FY2013-14, Government sold 36 sites capable of producing 14,000 units. Including other sources of land supply, total land supply was around 18,000 units, slightly below its targeted 20,000 units as some railway and urban renewal sites were delayed.

In FY2014-15, the land sale programme will contain 34 sites, with 24 new sites, capable of producing 15,500 units. Including other sources of land supply, it believes its target of supply 20,000 units per annum can be met.

The 2014-15 land sale programme will contain seven commercial sites and one hotel site with a total floor area of around 230,000sqm and 1,100 rooms. In the longer term, it also proposed seven measures to increase commercial supply.

These are: (1) continued rezoning of industrial sites to commercial use; (2) expedite conversion of suitable Government, Institution or Community use sites; (3) completing land use study of Caroline Hill for provision of commercial space in CWB; (4) planning new Central Harbourfront – 260,000sqm; (5) Kai Tak Development – 1.4mn sqm over 2016-17; (6) relocate and integrate existing government facilities in Kowloon Bay and Kwun Tong; and (7) public consultation of development of underground space in CWB, Happy Valley, Admiralty/Wan Chan and TST West.