Village land prices?

Hi,

I have a piece of land in a village called Che Ha Village on Sai Sha road, big enough to build a 1800 sq feet (600 each floor, 3 floors) village house. It is private land, but I need to separate it from a bigger piece of land from my family (obtain a lot number) and then I need to apply to build (I have what is called Ding (sp) rights). Apparently there is land premium to be paid if I sell the house (when built), though someone told me this will be waived if it was sold 5-6 years after the house was built, can anyone confirm this?


Can anyone advise how much the land is worth or what the market price is at this stage? Is there a different price for each stage of the process?


Thanks in advance for any help and advise!

Thanks for your reply ecareken. The house hasn't been built, I was thinking of selling the land & ding rights that I have.


Basically the land will be enough to build a 3 storey village detached house at around 600 sq feet each floor. So there are no parking space included, though there are rentable parking space close by and it is close to the entrance of the village. (which is not by the road, a few hundred yards in) There are not much views to speak of.


Personally if I was going to live in Hong Kong, then I think it is a great opportunity. I mean building a house how you want, you don't get that chance very often in HK.


Problem I have is, I live in the UK and don't go back to HK often. So i don't know the prices for this kind of thing, though I kind of know how it works. Do you know roughly how much this kind of thing sells for? (This is private land and not Government land that most village people apply for)

Yes I understand what you mean Oly88, but I already know some people who are interested and one have made an offer and it's not HK$10k! :)


I mean I have a rough idea of what the house is worth once it is built (all 3 flats or as one house). It is just that I wanted to know roughly what the land prices are, so that I can see what I should be getting at market value. I will be asking some estate agents, its just finding the time to go back to HK to do it.


However, I never thought of auctioning it, is it a better way to sell my land in HK? Here in the UK, I had the impression that people only use auction houses because they're unable to sell their house through the agents?

Thanks Oly88, I might try emailing the agents or maybe just call them.

Yes you're right ecareken, sorry I should've been more specific. Not on the outside of the building, I meant on the inside as I've seen some people make it as one house and it looked pretty good to me...... Many people build the houses as 3 separate flats, but there is the option to make it as one house with its own unique design (inside), if someone buys the land and build it themselves? I mean even the outside can be done to their own tastes. (within the planning rules)


Nim Wan - Sai O agents? Well noted, I will try to contact agents in those areas.

It was HK$1.75M, but I think it must be worth more than that.

cost of house 1.5M HKD and upwards depending on materials, design, etc.

cost of land premium varies so you need to check, but should be close to 3M HKD range, around your area.


so assume in the worst case that you sell your land for HKD 2M, in order to break even, the buyer needs to:


1) be able to sell for at least up 6.5M HKD....

2) ensure that there are no legal issues with land access to the house

3) pay for legal fees, etc.

4) find himself another "ding" to take over that land....

5) seems like a lot of risk to the buyer, especially from my personal experience of how fellow villagers often try to scupper the govt approval process by lodging countless complaints.

6) govt has become much more stringent in approving house applications, and require the "ding" to be stationed in HK during the entire application process which can take 5 or 6 years.


Others can correct me if I am wrong on the details... this is just from my own experience on these matters...

I'll do my best to answer the questions, but I'm not 100% on everything.


To my knowledge, there are 2 types of land. One is where Villagers apply for a piece of government land using a 'ding'. The second one (what I'm selling) is privately owned land, where someone can use a ding to apply for permission to build a house on it. Cost of building the house is around HK$1.5M, though I guess this could vary depend on who you use.


For government land, 'Land premium' is very expensive and it is a percentage of the market value of the house/all 3 flats. Someone told me it is around 50% and this is payable for the lifetime of the house whenever the house is sold. (or land is sold? Not sure on this one)


For private land, 'Land premium' it is less expensive. According to this (beware it is quite old): http://sunzi.lib.hku.hk/hkjo/view/44/4402408.pdf


On page 71, it seems the % is around 20-23% of the market value of the houses when sold. But for houses built on private land, someone told me, if it was sold 5-6 years after it was built, then there is no 'Land premium' to be paid. (not 100% on this)


To answer some of xpatwilier points:


1. The house/flats is probably worth at least HK$6m I think.

2. What problems could there be, I have no idea, since I come from the village no one is going to do anything to me?

3. Expected.

4. I'm going to sell my land with my ding rights. (the offer I had was for both)

5. I think they do this because, any male villager can apply for a piece of 'government land'. But there is less and less of it. So they scupper someone else's application, then they can apply for it? But mine is a private land already owned by me, no one can take that from me.

6. Yes this is correct for 'government land' I have heard some people have waited 10 years+. But again, what I'm selling is private land. This means I don't have to be in HK to apply for the right to build and it is quicker, around 2-3 years.


So the conclusion of whether it is worth it or not depends on what the buyer will use it for. If for building their own house, I think it is worth it. lets say:


Land + Ding cost: HK 2m

Building costs: HK 1.5m

Land premium: HK1.5m (according to that article)

Total: HK 5m


That is already less than the value of the flats. It could be even less, depend on how I do the deal with the buyer. Because the 'Land premium' could be waived if the house is 'officially' sold after 5-6 years. (not 100% on this, but can easily be found out from 'The Lands Department')


If it is for investment. Then it depends on how quickly you need the money to return. There are lots of developments by developers around our area, so I'm expecting it to rise quickly at one point... There is a golf course about 1-2 village away that is owned by a big developer. I think it is Sun lung kai sp?, not 100% on who, but they are big as they have bought lots of other land too. Developments is expected, but when is the important question. In my opinion, if someone have the money to invest and can hold/wait long term, then I can't see how it is not a good investment.

There are many issues that complicate this investment:

1) lack of car spaces & (sea) views.

2) villagers often delay or scupper deals by lodging groundless complaints, normally environmental, feng shui related, etc. 2 year processing can become 3 or 4 years...

3) are you sure that you do not have to be located in HK during the application process (even if your land is private), especially since the Land Dept is taking a much more stringent view over who is eligible. They were criticised for approving houses to indigenous villagers who were not even living in HK or intending to live in HK, so have become very strict...

4) time horizon and numerous processing uncertainties.

5) alot relies on you as the seller and the "ding" fulfilling your end of the bargain, and that is difficult for a Buyer to depend on, when legal recourse against you would be difficult (you are not in HK).

6) you might need to keep the property in your name until its fully built before transferring it. payment for construction of the land is coming from the Buyer, so there is expense without strong legal claim to the land/house...

7) the land is private land but it seems to be mixed with land owned by your family... there could be some disputes later if your family objects to some of the building plans etc...


just playing devil's advocate... it seems pretty risky and troublesome for the limited upside... these are some of the concerns a buyer might have.

You're right Oly88, I don't want the hassle of going back and forth to go through all the application process. I mean plane tickets isn't going to be cheap, not to mention I would have to use my holiday times to do this + my wife & kids won't be too happy of only going to HK for the next few years! :)


But for someone in HK, a lot of the concerns are expected when building your own house (except the ding part)? Applying for planning permission, check all the legalities, waiting time etc. I mean we would have to do that anyway even in UK, there are solicitors who do this (I know one in Tai Po, or at least my cousin knows). But one thing that is worse in the UK is that they can reject your planning application. But for our ding houses, as far as I know they can't reject it, especially since I am/the buyer will be applying to change the use of the private land for building a house. I am 'Not' using my ding to apply for government to give me a piece of land. My land is already there....


xpatwilier I think some of your concerns are valid, but then the buyer should do their own due diligence rather than just trust my word? Like talking to some villagers or the village leader to see if where I'm building will affect the feng shui or anything? To answer the concerns:


1. That is just personal preference. Personally I never thought sea view is important though I understand some people would want it. Same for parking space , I lived at the village for a couple of years about 10 years back. I didn't think it was a 'need' to have a car and the public transport is even better now. The mini bus service which stops at the front of the village goes to Ma On Shan (not far) for everyday shopping and it goes direct to University train station too. Then there is the buses that goes to Sai Kung and Sha Tin from the village bus station. There are also buses at Ma On Shan that goes direct to Central and other places. I used to work in Central and take the bus (it takes around 1 hour), so I just sleep on the way, which I can't if I drive obviously. :)


2. This shouldn't happen to me, as our village is not the kind that cause trouble. Lets put it this way, there are now a lot more 'outsiders' than the indigenous village people. In our village many villagers are like me, living abroad. Also like I said before, the buyer can/should talk to some village people & the village leader (not sure if thats the correct title)? One of my brothers is the 2nd village leader (basically 2nd in command for village matters) and can speak English.


3. As far as I know yes, all the village people I know tells me this. But I haven't confirmed it with The Lands Department personally. Like I said above, I am changing the use of my own private land to build and 'Not' applying to the government for them to give me the land...


4. This is expected in most countries even in UK. Though rather than the ding complications, it is the planning permission. But one advantage for my land is, they will have to let me build as far as I know. Solicitor can advise?


5. This is correct, but again this is normal concerns. I'm sure the solicitor can come up with something and advise the buyer with potential problems/solutions?


6. Same as 5. In the past, as far as I know money is paid in installments until completion of the deal i.e completion of building the house. I don't know if it will work, but the solicitor can draw up some sort of contract, where by officially (though not really) the buyer is lending me the money and the repayment is the house once built? or something along those lines, again a solicitor will advise all that.


7. Of course this will be sorted first before hand and my brothers already knew I may build a house or sell the land and they have no objection. Again this can happen in any country, except the person objecting may be your neighbours. They can also talk to my brother/brothers, all the village people knows who they are, so I can't lie. May be even make them sign some sort of agreement?


In my opinion, a lot of the things are done by the solicitor or are things you should do anyway. If I was living in HK, I wouldn't think it's a hassle or risky at all, this is not mainland China after all. There is only really 4-5 places the buyer would need to go to, The Lands Department, a Solicitor, the village, find a builder & may be an architect. (correct me if I'm wrong)


Also it seems all the concerns are listed in this thread, I can use it to give to the potential buyers as a checklist and for them to find out themselves! :) I think all these concerns can be alleviated by going to a solicitor who should advise you and a little due diligence.

I forgot to add to 1. that there are parking spaces close by for renting, about 1 minute or less walk to where the house will be.

Just picked up this thread.