Public housing plans could hurt commercial supply: analyst

Converting factory land into residential property can reduce available commerciable area.

The government’s plan to convert factory estates into residential housing may indirectly reduce the potential commerciable saleable area supply of 1.3m sqft, Marcos Chan, head of research for CBRE Greater Bay Area and Hong Kong said in a note.

In particular, he expressed fears that the mortgage loan of 90% maximum cover loan-to-value ratio for first-time buyers may increase purchasing demands, thereby hiking the prices of small- and medium-sized properties.

On the other hand, JLL Hong Kong Chairman Joseph Tsang thinks that the loan-to-value ratio may actually help first-time buyers since developers could offer financial benefits.

The two firms also have differing opinions on the Lands Resumption Ordinance, the law covering the resumption of government land for public purposes. Tsang stated that the LRO would boost supply for subsidised housing and reduce demand for private properties.

More subsidised housing supply would have a positive impact on the relaxation of mortgage restrictions, he added.

On the other hand, Chan opined that whilst it would help land supply in the long term, it will be a long process before resumed land could be useful for residential development.

Chan praised the numerous railway extension projects currently in place, saying that these could alleviate the burden on the East Rail Line and support the housing market in the long run.

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