“It is understandable that the atmosphere for land sales is not as good as it was before when our economy was better, and developers might want to be more careful while they have to deal with their funding sources.”

But she said past experiences suggested that developers were more interested in smaller plots of land during an economic downturn, adding authorities would put up smaller sites to boost sales.

“Regarding land sales, how can we attract developers to bid? I think our past experience shows us that it may be easier for them to develop relatively smaller plots of land when the economy is not doing well,” she said.

“So when we have some larger pieces of land, we can think about whether we should divide them into smaller plots … we do not have to decide on the exact plots now, we can decide when we plan to sell the land in a certain quarter.”

Hong Kong land tender gets just one bid, likely to be withdrawn

Linn said another way to boost interest was to provide more details such as infrastructure and facilities required when tendering sites in new development areas in places like Tung Chung, Kwu Tung North and Fanling North, to ensure that developers were well informed.

The government surprised the market last week when it announced that it would not sell any residential or commercial sites through tender in the last quarter of this financial year, the first time in 13 years.

Linn had said the decision was made in response to failed tenders and prevailing market conditions.

Only one plot, an industrial site in Yuen Long, has been selected for sale in the current quarter. The 3.2-hectare (eight acres) site has been earmarked for the construction of multistorey buildings catering to modern industries, and is expected to provide 160,000 square metres (1.7 million sq ft) of floor space.

The total land supply in the current financial year ending in March is expected to provide about 11,530 flats, about 10 per cent less than the annual target of 12,900 flats authorities were aiming to provide over the same period.

The minister stressed on Saturday that the arrangement was temporary, arguing the supply expected so far was already close to the annual target for private homes.

She added the government would not stop creating new land and the annual supply of private flats in the next five years would reach 19,000.

“We are not worried that the current land sales plan will affect future completion figures,” she said.

Stewart Leung Chi-kin, chairman of the Real Estate Developers Association, said smaller plots of land could enhance competition by allowing small and medium-sized developers to participate in the tendering process, which would prevent domination by large players.

“Smaller developers can participate if the land is divided into smaller plots, say about 10,000 to 20,000 sq ft per plot,” he said. “This would be beneficial for both the government and the developers.”

Leung, who also chairs Wheelock Properties, said developers had become cautious in acquiring land as the market conditions remained uncertain, but the situation would improve in the second half of the year.

“I guess the city’s economy will become better in the second half of this year. The adjustment right now should be temporary only,” he said.

Hong Kong may take ‘year or two’ extra to achieve budget surplus, Paul Chan says

Despite proposals from some politicians to slow down the development of the Kau Yi Chau artificial islands near Lantau in response to a huge estimated budget deficit, Linn reiterated the government’s determination to advance the mega project, along with the Northern Metropolis scheme.

The Northern Metropolis plan aims to build a 30,000-hectare area near the border with mainland China in the New Territories to provide housing and jobs with an “industry-driven” development approach.

Linn said she was confident that both projects would be financially sustainable but added that authorities would only decide on the overall budget after determining the land uses later this year.

Hong Kong sees record 6 failed land tenders amid high interest rates: Colliers

She stressed that the city “definitely” needed land for future developments, and the government would not stop land production.

“We should not worry or hesitate because of the current economic situation. We must complete the development of these 3,000 hectares of land, and the project will span more than 10 to 20 years,” she said.

“Provided that we have good plans in deploying, phasing and financing the projects, we will definitely make it.”