The government plans to revise its land sales program by cutting several large residential sites into smaller ones in the next fiscal year to put them within the financial reach of small and medium-sized developers, a rare move seen as a way to break the oligopoly of large developers.

The government will split four large pieces of land banks in Tseung Kwan O, Tuen Mun and Tai Po into eight smaller parcels. Seven of these smaller land parcels will be included in the sales programs in the next fiscal year starting this April, Secretary for Development Carrie Lam said during a media briefing on Thursday.

Lam said the decision to split one large land bank into two smaller pieces is in response to the requests from some developers in the city.

“They (the developers) said that the lands for sale offered by the government were too big in size,” Lam told reporters when announcing the government’s land sales plan for the next fiscal year.

“We believe more developers will be interested in bidding after we divide lands into smaller pieces,” she added.

Billy Mak, associate professor of Finance and Decision Sciences from Hong Kong Baptist University, said the government is making a wise decision to split the land for sale, as it will effectively prevent large developers from trying to manipulate the market.
“It is the duty of the government to maintain sufficient land supply, and the government is also obligated to make sure that these lands are also salable in the market. If the land banks they offer are too expensive to purchase, it ruled out the participation of small-and-medium developers and large developers could affect the market sentiment through its bidding prices,” said Mak.

The splitting of land banks will allow more medium-sized developers to join the land sales, increasing the chances of selling odds land lots and maintain a stable income for the government, Mak added.

Hong Kong recorded the second-lowest number of home transactions in January since the government started collecting the figures in 1996. A total of 3,507 homes transactions were recorded last month, a 56.2 percent decline from a year earlier and down 18.5 percent from December, Land Registry figures showed on Thursday.

It was the lowest record since November 2008. The value of those transactions stood at HK$22.2 billion last month, down 33.4 percent from a year earlier which was also 13.5 percent short from December, according to the government.

A total of 47 residential sites will be offered for sale next year for construction of 13,500 apartments, according to the government. It is also the first time the government has included private residential sites in the Kai Tak Development in the land sales program for next year.

Lam indicated that the role of the government is to maintain land sales proactively, while the transaction of the land pieces is still determined by the market. She added that government’s effort in boosting land supply will anyhow affect the city’s home prices but the impact is hard to estimate.

litao@chinadailyhk.com