Gao Li: The average annual supply of private residential units in the next five years is about 19,600, which is at a market digestible level

GaoLi Hong Kong's Senior Director of Valuation and Consulting Services and Head of Financing Evaluation, Hou Zhigang, stated that the new fiscal budget for the upcoming year indicates that the government, along with the MTR Corporation, will launch a total of 13 residential land plots. Among them, 3 plots located in Stanley, Sai Kung, and Tung Chung Area 106A are part of the 2025/26 rolling projects; the 6 newly added plots come from Shimen, Ho Man Tin, and the Northern Metropolis area.

He believes that the new batch of land includes 3 plots situated in urban areas with mature infrastructure, continuing the government's land sale direction from last year; the remaining 3 plots are located in the Hung Shui Kiu development area, which is currently under bidding and will close in July, aligning with the development of the Northern Metropolis. The remaining plots driven by the Urban Renewal Authority, railway projects, and public transport-oriented development are distributed in urban areas and new development zones, including Kowloon City, Tuen Mun, and Kai Tak. Overall, the distribution of land this year aligns with the government's future development blueprint.

Additionally, the supply of private residential units over the next five years is approximately 98,000, averaging about 19,600 units per year, which is roughly comparable to last year's total primary residential transaction volume of 20,540, representing a market absorption level.

As for the commercial market, the budget proposal to continue suspending the sale of commercial land for the coming year also meets expectations. Although market sentiment improved somewhat last year and the rental market became active again, the overall vacancy rate for Grade A office buildings remains high at 17.5%, indicating that the market still needs time to absorb the new supply completed in recent years.

GaoLi Valuation and Consulting Services Senior Director Liang Zhenfeng believes that there are still 2 luxury residential land plots in the land sale list that are rolling over, including the land at Circular Road in Stanley and Clear Water Bay Road in Sai Kung, which are scarce. These two plots have not been launched earlier mainly due to weak market sentiment and a slowdown in high-end residential transactions. With the recent warming of the luxury residential market, the government may consider restarting the bidding process for these related plots this year to seize the recovery momentum and further increase land revenue sources. If the government successfully launches the aforementioned luxury land plots, it will help inject more confidence into the new round of market wait-and-see sentiment