Higher deposit for land sales will add pressure on small firms, tightening the big developers’ grip on Hong Kong’s land supply
- Only 14 of the 112 development parcels sold in Hong Kong since the 2015 financial year changed hands for less than HK$400 million
- Nine of the 10 largest land deals occurred since 2017, underscoring how the financial scale of the property game has shifted in favour of the big developers
A HK$50 million (US$6.4 million) deposit now applies on all land parcels that are valued at over HK$400 million, while plots assessed at between HK$200 million and less than HK$300 million requires a non-refundable deposit of HK$30 million, the Lands Department said last week.
The tiered fee structure – a change from the flat, non-refundable deposit of HK$25 million for all land parcels irrespective of their valuations – followed a high-profile default in June when a developer reneged on its contract after winning a land tender at the former Kai Tak airport.
“This will add pressure on them to secure the financing from banks, which tend to be less favourable to smaller developers who lack the credit track record or bargaining power of their larger competitors,” said Hannah Jeong, head of valuation & advisory services at Colliers International Hong Kong.
The successful tenderer will also be required to make a part payment equal to 10 per cent of the winning bid minus the initial deposit within seven working days of being awarded the tender. The balance will have to paid within 28 days.
