The Hong Kong government has announced a pilot program to implement the "Hong Kong land for Hong Kong people" project on two land parcels in the Kai Tak development area, which have been chosen for development of around 1,100 residential flats for local permanent residents with a restriction that they can only resold to Hong Kong permanent residents in the capcity of an individual for 30 years.

These conditions will be stated in the property sales terms requiring developers to sell the constructed flats to Hong Kong permanent residents only. The home owners will also be restricted from re-selling their flats to non local permanent residents for three decades. The flat can only be sold on the open market after fulfilling this criteria.

Chief Executive Leung Chun-ying (second right), accompanied by the Secretary for Development Paul Chan (left), is briefed on the Kai Tak Development on Thursday. [Photo/chinadailyapac.com]

"The policy is a pilot scheme and the administration will gauge the market response to determine when to extend the scheme and what other land parcels should be included in the policy," Chief Executive Leung Chun-ying said on Thursday during an inspection of cruise terminal facilities in Kowloon East. "I think the scheme should be successful in satisfying local residents' demand for affordable housing."

The implementation of the policy in a short time shows the government's determination to solve the housing problem, he added, urging people to have confidence in his administration.

Leung did not announce the details of the "Hong Kong land for Hong Kong people" policy when he unveiled the 10 measures to curb soaring property prices last week. The new policies were announced after a survey showed that 90 percent of the Hong Kong people think that local home prices are too high to afford.

"The government will sell the two chosen Kai Tak land parcels by tender in the first quarter of 2013. The two land parcels have a total area of 1.6 hectares that can build 1,100 residential flats," Secretary for Development Paul Chan Mo-po said. The government estimated that the construction of the 1,100 flats should be finished in mid-2016. However, when these flats will be put on the market will depend on the developers' schedule of launching pre-sales.

"I believe property developers will adjust their estimations when they bid for the two Kai Tak land parcels that have the resale restriction. The mechanism is still market-orientated but it is not the government's aim to make a great deal of revenue from selling these two land plots," Leung added.

The government hoped that the "Hong Kong land for Hong Kong people" policy can also be applied to residential flats built by other statutory bodies such as the Housing Authority and the Urban Renewal Authority.

Real estate analysts said that the policy may curtail the swelling home prices to a certain extent and home developers will also be cautious in making bids for the land parcels with the resale restriction.

"Local property developers will show restraint in bidding for these two Kai Tak land parcels. I predict their bidding price will be 20 percent lower than the usual price, reflecting the business risks associated with developing the land parcels with resale restriction," Midland Surveyors Director Alvin Lam told China Daily.

"The new policy will affect the transferability of the local secondary home market as mainland home buyers are a great buying source in the secondary market," Ricacorp Properties Ltd Head of Research Patrick Chow told China Daily. "This may curtail the current swelling home prices to a certain extent".

However, Chow reckoned that the new policy may not exert a strong influence in curbing home prices in the long run as the residential flats built under the policy are still small in numbers compared to the overall residential flat market.

oswald@chinadailyhk.com