Are government tenders to blame for Hong Kong’s hot land values?
Are government tenders to blame for Hong Kong’s hot land values?
Best to return to auctions, experts clamour
Surveyors in Hong Kong are calling for a return to auction as an alternative method to the more opaque process of tendering in the procurement of government lands, the South China Morning Post reported.
“The tender system has accelerated the upward movement of prices, which has led to an unhealthy development of Hong Kong’s property market,” Victor Lai Kin-fai, chief executive of property consultancy Centaline Professionals, explained to the Post.
“In a tender, there is no transparency at all and one or several bidders can be very aggressive and reckless in their offers.”
Lai’s comments come amid months of increasingly extravagant tenders for residential land parcels in the Chinese SAR. In December, property development giant HNA acquired via tender a Kai Tak plot at HKD13,600 (USD1,753) per square foot. The acquisition broke its own record purchase of a site in the same district for HKD13,500 per sq ft in November.
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HNA’s purchases pushed values of residential land in the district between those months by 27 percent, the Post reported.
With auctions, transparency is all but assured, with bidders knowing exactly “who participates in the bidding and what they offer,” Lai explained. “Auction is the best way to ensure sites are sold at fair market levels with bidders exchanging bids openly.”
Lai said Hong Kong should follow the tack of the Singaporean government, which announces the top three offers at the onset of a tender.
Thomas Lam, senior director of Knight Frank, told the Post that highly coveted parcels in cities like Hong Kong should be transacted via bidding. “There shouldn’t be just one single method. In mainland China, land is sold by both auction and tender.”
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Source: Property Report