Hong Kong’s Residential Supply Squeeze Tightens Ahead of 2027
With public land supply drying up rapidly, the pipeline for residential development in Hong Kong is narrowing down. According to government figures, the average annual supply of private residential space available for sale over 2017 to 22 was around 11,000 units. But over 2023 to 26, the figure is expected to plummet to around 6,000 units per year, a contraction of 45%. This means the city could face a shortage of new residential supply from around 2027 and 28.
Uncertainty is increasingly afflicting a string of high-profile residential projects across Macau as increasingly tenuous land sale tenders, anxious developers and risk-averse authorities all combine to stifle both construction and sale as the city’s property market suffers. While buildings are yet to complete from pre-HKMB land purchases, the lack of recent government land sales and tenders means that there are diminishing numbers of future schemes in the pipeline.
New construction launch for private residential fell to a five-year low of 8,800 units in 2025. This reflects a contraction in supply that will tighten options in the short term before increasing in a few years time.
Developers eager to sell their surplus schemes are reluctant to dump them on the market too quickly following improved sales, however, others are queuing up to vie for the remaining plots, putting pressure on prices and driving up the number of bidders for each plot.
Jones Lang LaSalle senior researcher Cathie Chung noted that the sector was undergoing a structural change from a state of excess supply to one of supply shortage. This change would affect the level of pricing resilience and the potential for land acquisition, and would take time to translate into demand, but in the end, housing values would be supported by the change in demand.
While long-term initiatives such as the Northern Metropolis corridor may go some way to alleviating the current lack of supply in the market, those chasing first-hand opportunities are likely to have to wait for several more years as fewer new product comes to market.
The Investment Angle:
- Keep an eye on the trends in land sales: with the Government releasing fewer sites in this cycle, developers are having to compete more aggressively for the land that is available, potentially pushing up the sale price.
- Pay attention to an industry wide benchmark we track called construction start data. According to numbers released for 2025, new project constructions are declining, which could be indicative of a tightening supply in the future.
- Consider risk management by looking to established urban redevelopment opportunity rather than speculative greenfield sites, and potentially higher returns due to increased bidding competition.
- Look for a change in price expectations even as demand normalizes as supply constraints should serve to bolster support for prices.
A Final Thought:
The land squeeze in Hong Kong brings to the fore the issue of supply-inelasticity affecting property markets. Sellers and buyers alike may wish to take note that those expecting a constant stream of new supplies of stock may need to think again as a more conservative development outlook is likely to result in fewer chances for transactions but relatively more stable property values over the next few years.
