Hong Kong authorities have rejected a bid for the first site put up for public tender under a pilot housing scheme for private developers to build subsidised homes, after its tendered premium failed to meet the government’s reserve price.
The Lands Department announced on Wednesday the tender result for the site on Cheung Man Road in Chai Wan for development under the Private Subsidised Sale Flat Pilot Scheme, saying it had rejected the sole bid from private developer Able Best Limited.
“The government will not sell a site if no bid reaches the reserve price as assessed by the government’s professional valuers,” it said. “This is in the interest of protecting public revenue.”
The department insisted the tender provided enough incentives for private developers, but said this could be reviewed in future if there was room to adjust tendering conditions.
It added that authorities would not speculate on the considerations behind bids placed by tenderers.
The department explained that bids were influenced by a variety of factors, such as how individual tenderers assessed the attractiveness of the site and the market conditions, as well as their corporate positions and development strategies.
The government announced the policy framework of the pilot scheme last year for private developers to take part in the development of subsidised flats for sale to boost overall development capacity by leveraging market forces.
There are two approaches for development under the scheme – the public tendering approach and the private land approach.
The authorities had said three sites would be put up for tender in batches from 2023-24 financial year under public tendering.
The Chai Wan site was the first put up for public tender in March, which closed on July 19.
The site has an area of about 5,213 square metres and is designated for non-industrial purposes. It would offer no fewer than 700 private subsidised sale flats.
The flats would be sold at 65 per cent of market prices, which had taken into account the Lands Department’s assessment of the reserve price for the site.
A government spokesman said the policy framework of the scheme had been formulated upon overall consideration of various factors, including provision of more choices of subsidised sale flats for the public, positioning of the units in the housing ladder and the attractiveness to private developers.
“The key parameters of the pilot scheme have been clearly set out under the policy framework, and relevant requirements have been reflected in the land sale conditions. We believe that the arrangements have already provided sufficient incentives for developers’ participation while ensuring flat quality,” he said.
“We will also keep in view the market development, and review in due course if there is a need to adjust some of the key parameters of the pilot scheme, as well as future tender arrangements for sites under the pilot scheme.”
Anthony Chiu Kwok-wai, executive director of the Federation of Public Housing Estates, said the pilot scheme would enrich the housing ladder and was still worth supporting, despite the failed bid by Able Best Limited.
However, he suggested that appropriate adjustments be made to the parameters and discount rates of future project development based on market needs, as “sentiment has become more cautious under the influence of the current declining property market”.
“The remaining two proposed sites should be carefully studied and released at the appropriate time to avoid failed bids,” he added.
