Meilien: Hong Kong land supply gradually falling, expect property developers to absorb land for construction below ten thousand units for the second consecutive year.

On February 28, the Hong Kong Development Bureau announced its land sale plan for the new fiscal year, expecting potential land supply for the 25/26 financial year to reach a 15-year low since 2011/12. The potential land supply for the 25/26 financial year (including government land for housing, railway property development, private development, and projects by the Urban Renewal Authority) is estimated to be able to build approximately 13,700 units, a decrease of nearly 10% compared to this year's 15,150 units, reaching a 15-year low since 2011/12. Sammy Po, Chief Analyst of Midland Realty, mentioned that it is worth noting that the actual absorption of land supply by developers in recent years has been decreasing compared to the potential land supply. The ratio has been declining for 3 consecutive years, and has now dropped below 60%, meaning that only around 60% of the released land is taken up by developers. With the potential land supply for the new fiscal year hitting a new low, it is estimated that developers will absorb even less land in the next fiscal year, possibly decreasing to 8,200 residential units, potentially reaching a 16-year low and staying below 10,000 units for the second consecutive year. Although the gradual decrease in land supply may not have a significant impact on the short-term property market supply, it could affect the completion rate in the future years. Based on past data, there is often a gap between the actual absorption of land supply by developers and the potential land supply each year. Currently, developers are holding a large number of unsold units, and their willingness to invest in new land is relatively low. Even though the scale of the 8 government land plots in the new fiscal year is not large, it is believed that developers will find it easier to absorb, but with no significant improvement in their willingness to invest, it is estimated that the ratio of developers absorbing land supply compared to potential supply will remain at around 60%. Based on this calculation, developers are expected to absorb only about 8,200 residential units in the new fiscal year.