No new applicants for sale of old buildings in Q1

Demand and investments for private residential units have slowed.

Hong Kong received no new applications for the compulsory sale of old buildings throughout the first three months of 2024, reports JLL, based on its latest residential market monitor.

This comes after the number of applications dropped to the lowest level since 2004, at just 5 in 2023. Prior to that, the number of compulsory sales applications were just 22 in 2022.

This is despite the number of private buildings aged 50 years or above having climbed to over 9,600 in 2024. 

This deceleration underscores the cautious sentiment prevailing in the market, JLL noted. 

Despite the removal of cooling measures, demand for real estate and investments are expected to remain lackluster in 2024, amidst high interest rates, tight liquidity, intense price competition, and stagnation of land sales, noted Norry Lee, senior director of projects strategy and consultancy department at JLL Hong Kong.

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The number of private residential units that have commenced construction has dropped to just 28,000 units for 2022 and 2023 combined, mirroring levels seen in 2003-2004.
 
For 2024, projections suggest that the commencement of new private residential projects will remain subdued, with an estimated flat production of just 14,000 units– 12.8% and 32% lower than in FY2022-23 and FY2021-22, respectively.

This is also lower than the 15,150 private housing units that the government is targeting.

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"In FY2024-25, the government has set a target of 15,150 units from private housing land supply. We believe this target is unlikely to be achieved, as several sites in this Land Sale Programme carry a relatively high risk of withdrawal under the current market situation,” said Cathie Chung, senior director of research at JLL Hong Kong, said. 

The anticipated private residential completion in 2026-28 may further drop, Chung added.