The Hong Kong Special Administrative Region government has generated HK$2.7 billion ($347.8 million) in land sales so far this fiscal year, far below its full-year target, according to data revealed at Friday’s news conference on its third-quarter land-sale program.

Secretary for Development Bernadette Linn Hon-ho cautioned that this figure doesn’t reflect the actual revenue to date, as several cases are still being processed.

During his budget speech at the beginning of the year, Financial Secretary Paul Chan Mo-po had said he expected revenue of HK$33 billion from land sales in the 2024-25 fiscal year, which runs from April 1 through March 31.

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Hannah Jeong, executive director, head of valuation and advisory services at CBRE Hong Kong, said in a follow-up interview on Friday: “Overall speaking, due to the recovering land market, the government land sales revenue is expected to stay at the low level. Further distressed-asset sales are offering attractive deals in the market; developers may not look for the land sales as their priority in 2025.”

The HKSAR government also announced its land-sale program for the third quarter, featuring tenders for one residential site in Sha Tin and an industrial site in Hung Shui Kiu.

Linn said that the new residential site, at Mei Tin Road, Tai Wai, Sha Tin in the New Territories, is expected to provide 360 units.

Chester Leung, senior director of valuation and advisory services at CBRE Hong Kong, said after the news conference: “The start of rate cuts will spark interest from developers to consider taking part in the tender to get more land reserve. … The government is aware of the residential supply concerns with huge inventories among the developers and will cautiously launch one residential site in the upcoming quarter, which is in smaller scale, to test developers’ confidence level.”

Ryan Ip Man-ki, head of land and housing research at Our Hong Kong Foundation, said that the consistent release of small to medium-sized residential land parcels reflects the Hong Kong authorities’ cautious approach to land supply.

This conservative strategy aims to maintain a stable supply of private residential land while acknowledging current weak consumption, Ip added.

As part of the quarterly land sale program, MTR Corp Ltd will also relaunch the first phase of the Tung Chung East project this quarter. In response to faltering market demand, this project now is expected to offer about 600 flats — half the size of its original October 2023 tender.

“The tender failure in 2023 was due to weak market sentiment and insufficient community and infrastructure support,” Leung said.

He added that it is good to see MTR has split the projects into a smaller scale to cater to different developers. Whether any tenderer will be awarded successfully depends on a number of factors, including the economic outlook, market sentiment and tender requirement, Leung said.

For the third quarter, the total private housing land supply is expected to support around 2,200 flats. Linn reported that for the first three quarters of the financial year, the total private home supply rose to about 6,470 units, nearly half of the annual target of 13,200 units.

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In past decades, Hong Kong has relied heavily on land sales and other property transactions to fund its local residents’ social welfare programs, such as transportation and healthcare subsidies. This revenue once accounted for a lion’s share — up to one-fifth —of the government’s coffers, but dwindled to HK$19.6 billion, or 3.5 percent of its total revenue, in the last fiscal year, when the government’s deficit ballooned to HK$101.6 billion.

In September, the property deals for new and lived-in homes, offices, shops, car parks and industrial space tumbled 18.7 percent month-on-month to 3,843 units, according to data released by the Land Registry on Oct 3.

Of these sales, 2,848 were for residential units, marking a 22.1 percent fall from August.

Contact the writer at tianyuanzhang@chinadailyhk.com