Hong Kong to allow blocking home sales for security reasons

HONG KONG: Confirming an earlier media report that had rocked property stocks, this week the Development Bureau said that Hong Kong’s Lands Department added national security clauses to all land sale and short-term lease tender documents.

As a result of the move, the government can now disqualify bids and suspend short-term leases due to national security concerns, the Hong Kong Economic Times reported.

"Safeguarding national security is the shared responsibility by the entire Hong Kong society," noted Development Bureau officials, as reported by Reuters.

The Hong Kong Economic Times also reported that local authorities began to include applicable provisions of the National Security Law in the terms of land sales and short-term leases.

"It suggests that developers will be even more cautious in putting a bid in land sale," noted Steven Leung, a sales director at UOB Kay Hian, as quoted by Reuters.

In January, the Lands Department said that as the tendered premiums did not meet the government’s reserve price for a site, all four tenders received for the sale of a residential site in the Stanley neighborhood on Hong Kong Island were rejected.

However, the bureau said that the first land sale project in the Kai Tak area, which included the new security terms, attracted six bidders, and the site was successfully sold by the end of 2022.

"For law-abiding bidders, the relevant terms should not affect their willingness to bid, and we are not worried that the terms will affect the government’s push for land," the bureau added.

In 2022, Private home prices in Hong Kong, one of the most expensive real estate markets in the world, fell 15.6 percent, the first annual drop since 2008.

The National Security Law, which punishes subversion, collusion with foreign forces and terrorism, with up to life in prison, was imposed by Beijing on the former British colony in 2020.