Hong Kong leader defends adding security clause to land auctions
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News that the government had added security law requirements to land auctions helped roil shares of property developers on Monday.
PHOTO: REUTERS
HONG KONG – Hong Kong’s leader defended the inclusion of a national security clause in the city’s land sales, saying it was the duty of the whole city to protect its interests.
News that the government had added security law requirements to land auctions helped roil shares of major property developers on Monday, with New World Development sinking almost 7 per cent.
A buyer can be disqualified if it or the parent firm engages in activities that endanger national security or affect public order, according to official tender documents.
“The introduction of national security factors in our sale of land is an obvious thing that is in accordance with our responsibility in protecting national security,” said Hong Kong Chief Executive John Lee at a weekly press briefing on Tuesday.
“(The inclusion) has no relevance at all to any decision by any businesses that are interested in bidding,” he added.
The move underscores the risks for tycoons who control Hong Kong’s biggest developers.
The extra scrutiny comes as property firms grapple with slumping home prices, which tumbled 16 per cent in 2022.
Land premium and stamp duties account for almost a third of the government’s total annual income.
“The big unknown is whether the new policy will be seen and used as a retaliation tool or is a fail-safe in cases of egregious national security breaches,” said Moody’s Analytics economist Heron Lim.
“If the former, businesses are likely to assess it as higher risk.”
Beijing imposed the security law on the city in 2020 to prevent dissent in the wake of often-violent protests the year before. Land has played a key role in Hong Kong ever since the territory was colonised in the 1840s, with the government owning virtually all of it.
“Businesses will need assurances,” said Mr Lim. “The Hong Kong government will need further explanation and clarity to indicate how the clauses will be put to work in practice.”
In a sign of weak interest in Hong Kong property, MTR Corp rejected bids for a project on Lantau Island on Monday and will re-tender in due course.
The railway operator received just three bids, the fewest for its housing projects since 2014, according to the Hong Kong Economic Journal. BLOOMBERG
