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RESIDENTIAL PROPERTY | Staff Reporter, Hong Kong
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Real estate sector flags worsening private housing supply

The government expects an annual average of 18,000 private residential units in the next five years, down from 19,600 last year.

The reduction in private housing units offered by the government starting this year will likely lead to medium-term supply shortfall within 2025-2027, CBRE Hong Kong said.

The government on 24 February said it estimates an annual average production of 18,000 units for private housing in the next five years, starting 2021. This is lower than the 19,600 average last year.

This “signals the potential shortfall in the medium-term residential supply in and around 2025-2027,” CBRE head of research Marcos Chan said.

“Shortage in future supply will continue to provide support for private residential capital values,” he added.

The budget statement also outlined the 2021-22 Land Sale Programme, which will comprise of 15 residential sites and three commercial sites. This is expected to bring 6,000 residential units and some 480,000 square meters of commercial space.

Chan said whilst the commercial sites offered this year is less than previous years, it is “appropriate” considering the abundant supply of office and retail space in the pipeline.

Further, he said the government’s plan to rezone five commercial sites in Kowloon East for residential use will help fuel long-term residential supply, but will likely reduce attractiveness of Kai Tak as a commercial hub. The government's plan to rezone certain areas in Kowloon East is expected to provide some 5,800 private housing units.

For her part, Dorothy Chow, senior director of valuation advisory at JLL, likewise said private housing supply is expected to further decrease.

“With the government increasing the proportion of new public housing supply target since 2018, the lack of land supply for private housing development is expected to worsen,” she said.

She has recommended that the government rezone five commercial sites at Kai Tak to residential use. She noted that just this month, the last residential site in the Kai Tak Development area has been sold.

“However, for the healthy and sustainable future development of Hong Kong, the government should ensure that the city has sufficient land for commercial development, and not focus solely on residential development,” she added.
 

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