Compulsory sale applications drop 24% in 2022

But JLL expected a more visible return in the second half of 2023

Compulsory sale applications in Hong Kong decreased by 24% in 2022, data from JLL's Residential Market Monitor stated.

The drop was caused by the market downturn and looming uncertainties that weakened developers' confidence and risk appetite, delaying the acquisition process.

Meanwhile, owners of aged buildings, including senior citizens who are reluctant to relocate, became less willing to accept lower-priced offers and instead hold on to their properties until the market turns buoyant again.

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In addition, rising financial costs and tighter cash flows due to elevated interest rates became an increasing concern due to the lengthy title unification and development cycle.

JLL also saw the 30% stamp duty as another hindrance for land investors as it might take up more cash flow.

Norry Lee, JLL Hong Kong's Senior Director of Projects Strategy and Consultancy Department, said that the local government must look for new ways to incentivise redevelopment to align private and public interests to speed up its process and boost the private housing supply.

However, Nelson Wong, JLL Hong Kong's Executive Director of Research, expected a more visible return in the applications in the second half of 2023 as the regulations are relaxed and the market sentiment stabilises.