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Supply of new private flats expected to fall 2.
Waterfront plans under fire
1. Supply of new private flats expected to fall
GK Goh Securities expects the supply of private-sector residential units to fall
in 2004 as a result of fewer government sites for sale and the sharp decline in
farmland conversion projects. It estimates there will be 30,000 new flats available
for sale this year, but only 20,000 to 25,000 each next year and in 2003, down
more than 20 per cent. The Government suspended land sales for nine months in
1998. They resumed in 1999, but only a small number of plots have been sold through
auctions and tenders. There has been a substantial drop in the past few years
in the number of sites taken up by developers by auctions or tenders, as well
as farmland converted into residential use. GK Goh said the number of units to
be completed in 2004 might fall. Because property projects could be pre-sold 20
months before completion, the fall in supply might start to show in the market
from next year. The possible decline in new-flat supply also was reflected in
the receding number of consent to commence work applications pending government
approval. In the 12 months to the middle of last year, the Government received
and approved applications to develop 34,000 private units. But, in the past 12
months, the figure was only 20,000. In line with the decline, property development
schedules of major developers fell an average 20 per cent to 25 per cent in terms
of floor area for residential units to be completed in the next few years. GK
Goh said the Government's shrinking land-sales programme this financial year pointed
to reduced flat supplies three to four years down the road. The switch to sell
most land sites through the application list system had changed the rules of the
game, giving greater control on land supply to leading developers. "As the developable
areas of sites on the application list are large and involve heavy investments,
small developers are unable to participate," it said. "An oligopoly, plus the
uncertainty facing the property market, means major developers can form cartels
to control land supplies through well-timed bids for sites on the application
list." Although this year's land-sales programme might provide sites that could
be developed into 21,700 units, developers might be able to force the supply of
private units to decline to 13,200 by choosing not to apply for sites, the brokerage
said. "A smaller supply will give developers stronger pricing power for their
projects," it said. The awarding of tenders for a large number of sites above
new railway and subway stations also had slowed due to lack of interest from developers. [Source:
SCMP, 12 September 2001] 2.
Waterfront plans under fire
The Government's proposal to offer four large commercial sites on Wan Chai and
Causeway Bay waterfronts has drawn objections and reservations from developers.
Great Eagle Holdings voiced opposition to the plan while Sino Land said the market
could not absorb so much commercial land supply. In the latest Wan Chai Reclamation
study, the Territory Development Department suggested offering four sites - two
by rezoning and two on reclaimed land - that could provide a total floor area
of six million square feet. The largest site involves re-zoning a 2.75 hectare
site covering the Wan Chai bus terminal and indoor gymnasium into a comprehensive
development area. The site, in front of Sun Hung Kai Centre, Great Eagle Centre
and Harbour Centre, could provide a gross floor area of 3.45 million sq ft, with
a height limit of 221 metres. The other site for rezoning is a 91,000 sq ft lot
at the Fleet Arcade near Fenwick Pier, which could provide 1.3 million sq ft of
commercial space. The two reclamation sites, for hotel and retail development,
include a 75,300 sq ft lot neighbouring the Police Officers Club and a 50,000
sq ft lot near Citicorp Centre and Island Eastern Corridor. Great Eagle Holdings
assistant director Adrian Lee said the firm would oppose the proposal. He said
it was not feasible because the existing Wan Chai north transport network was
insufficient to support additional hugh office supply. The proposed Central-Wan
Chai Bypass and Island Eastern Corridor Link, connecting Hong Kong Station and
Island Eastern Corridor, would not be able to cope with the traffic flow in Wan
Chai north, he said. "When [the convention centre is] hosting events, there are
traffic jams along Convention Avenue, Harbour Road and Hung Hing Road," he said.
He said existing office supply on Hong Kong Island met market demand and building
density in Wan Chai already was too high. Commercial sites zoned in West Kowloon
and Hunghom reclamation areas could meet future demand for office space. Sino
Land development division general manager of planning Chan Cheung-kit said the
market could not absorb a large supply of commercial land, but long-term demand
was subject to further study. He said it was too early to say whether the group
would object to the Government's proposal until details were gazetted for public
consultation. Great Eagle owns the majority of Great Eagle Centre. Sino Land is
part owner of Harbour Centre and Central Plaza. Sun Hung Kai Properties would
not comment. The group's properties in the area include Sun Hung Kai Centre, Central
Plaza and World Trade Centre. Analysts said future development on the waterfront
would block sea views and affect values of buildings concerned. The bus terminal
site, for example, could rise to 70 storeys under the proposed height limit. [Source:
SCMP, 12 September 2001]
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