Hong Kong adds security law clauses to land sales, property stocks drop

HONG KONG (Reuters) – Hong Kong’s Lands Department has added national security clauses to all land sale and short-term lease tender documents in the Asian financial hub, the Development Bureau said on Monday, confirming an earlier media report that had sent property stocks tumbling.

The move empowers the government to disqualify bids and suspend short-term leases due to national security reasons, Hong Kong Economic Times report on Monday said, adding the terms had been included in the latest land sales.

“Safeguarding national security is the shared responsibility by the entire Hong Kong society,” the Development Bureau told Reuters, confirming the media report.

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

That sent Hong Kong property stocks index down as much as 4.9% to the lowest in six weeks, compared to a 0.1% slip in the benchmark Hang Seng Index.

“It suggests that developers will be even more cautious in putting a bid in land sale,” said Steven Leung, a sales director at UOB Kay Hian.

Hong Kong property groups CK Asset, Hang Lung Properties, Sun Hung Kai Properties, Henderson Land and New World Development fell between 0.8% and 6.7%

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

However, the first land sale project in the Kai Tak area that included the relevant terms attracted six bidders and the site was successfully sold by the end of 2022, said the bureau, which its responsibility includes land administration, infrastructure development, urban planning and renewal.

“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.

Private home prices in the city, one of the most unaffordable territories in the world, fell 15.6% in 2022 in 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.

Western governments and rights groups have criticised the law for causing the deterioration of freedoms and the rule of law. Hong Kong and Chinese authorities say it is necessary to restore stability after anti-government protests in 2019.

(Reporting by Jessie Pang and Donny Kwok; Editing by Christian Schmollinger and Josie Kao)