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Sunday, Jun 01, 2025

Sky-high land prices force Hong Kong builders to look abroad

Sky-high land prices force Hong Kong builders to look abroad

Far East, Swire Properties and Nan Fung are among the builders who have announced new projects abroad as it becomes more difficult to buy land at home; At Kai Tak, the site of the city’s former airport, the land price has almost quadrupled to HK$19,636 per square foot in the last six years

Hong Kong’s sky-high land prices are prompting more and more Hong Kong’s developers to look beyond the world’s most expensive property market for opportunities.

Far East Consortium, Swire Properties and Nan Fung Development are among the builders who have recently announced projects in other countries – and even other sectors – as it becomes more difficult to buy land at home.

The cost of land in Hong Kong has skyrocketed in recent years because of a pronounced lack of supply. For instance, at Kai Tak, the site of the city’s former airport, the land price has almost quadrupled from HK$5,157 per square foot to HK$19,636 per square foot in the last six years.

“Hong Kong’s land is quite expensive. Usually only the big developers can win land tenders,” said Sam Chi-yung, strategist at Springwaters Financial Securities. “The relatively smaller developers may turn to other countries to seek opportunities.”

Far East said it had bought a 20-acre parcel of residential land in the centre of Manchester in the UK from Network Rail, on which it hopes to build more than 1,000 units. It marks the latest move by the developer to deepen its foothold in markets outside Hong Kong.

Swire Properties early this month said it would develop a luxury residential project in Jakarta, in its first foray into Indonesia, Southeast Asia’s largest economy.

Nan Fung Development said last week it would deepen its move into health care with a joint venture that will produce and sell cancer and arthritis medicines in mainland China.

Land use in Hong Kong

Hong Kong is looking for more space to house its future population. It seems the city is starved of space, and regularly earns a name for being crowded and densely populated.

Chinese Estates Holdings has bought sizeable stakes and bonds of Chinese developer Evergrande.

Sam said it was not just Far East investing in the UK’s property market at the moment.

“Britain’s currency value has been dropping amid Brexit so the projects will be comparatively more attractive. Several listed companies have bought commercial buildings in Britain,” he said.

Those companies include Wing Tai Properties, CK Asset Holdings and Nan Fung Development.

Far East already has a fairly diversified portfolio, with only a third of its revenue generated in Hong Kong.

Apart from Hong Kong and Manchester, it has projects in Gold Coast, Melbourne, Perth, Brisbane, London, Guangzhou and Singapore, which can provide more than 24,000 units, according to its website.

Its latest purchase takes its land investment in Manchester to more than £30 million (US$37.4 million) and increases its land bank. It has a development pipeline of about 3,800 homes there that it aims to deliver over the next five years.

It forms part of its Northern Gateway project, one of the largest residential schemes in the United Kingdom with more than 15,000 units.

“We have a strong belief in the population growth of Manchester and are encouraged by the demand of quality housing in the city which FEC [Far East Consortium] will be delivering,” said Chris Hoong, managing director of FEC.

Chiu was recently quoted by the newspaper Ming Pao as saying it would be difficult for Far East to significantly increase its land bank in Hong Kong as the prices had become decoupled from the people’s buying power.

The developer’s share price edged up 0.3 per cent to close at HK$3.8 on Monday after the announcement in the afternoon, then added another 0.3 per cent to HK$3.81 at noon on Tuesday.

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