Chief Executive Carrie Lam Cheng Yuet-ngor dismissed accusations that the government set the price too high for a land plot on the Peak, which developers cited as the reason for the failure of the auction for the site.
The government does not have a high land premium policy but there is also no way for it to sell land cheaply because it has responsibility to protect public funds, Lam told reporters.
The plot in question is a 189,000-square-foot site with a gross floor area of about 404,300 sq ft on Mansfield Road, which was the first site on the Peak put out to tender by the government in eight years.
It had been estimated that the government could fetch between HK$24.258 billion and HK$48.517 billion from the land auction, setting a new sale record for government-owned land, the Hong Kong Economic Journal reports.
However, the Lands Department announced on Tuesday, four days after the bidding process ended, that the all the five tenders received for the purchase of the lot had been rejected because the tendered premiums did not meet the government’s reserve price for the site.
The land auction failure, the first since 2016, prompted the bidding developers to complain that the government was out of touch with reality by setting the asking price unrealistically high. They said their bids were based on the current market level and therefore reasonable.
Defending the Lands Department, Lam said it actually set the reserve price on the morning of last Friday when the tender closed, not two months ago as alleged by some quarters, RTHK reported.
The chief executive also refuted allegations that the government failed to take into account how a proposed vacant property tax would affect market sentiment before setting the reserve price. She said she cannot see any direct correlation between the vacancy tax and the fact that the tendered premiums did not meet the reserve price, adding that developers might have their very unique way of viewing the market.
She said her policy address last week reflected the government’s determination to increase land supply and the land supply should not be affected by fluctuations in the economy or home prices.
The Lands Department said it does not speculate on the reasons for the level of bids placed by the developers.
Tony Wan Wai-ming, general manager (HK properties) of K Wah International, which was one of the bidders, pointed out that the scale of the project on Mansfield Road was so large that developers have to consider the effect of the vacancy tax on how fast the flats are sold before they tendered.
Size will still be the deciding factor when developers set their tender prices for land plot auctions in the future, Wan said.
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