{"id":571,"date":"2026-06-26T17:24:16","date_gmt":"2026-06-26T09:24:16","guid":{"rendered":"https:\/\/hk.propmark.com\/hong-kong-real-estate-blog\/?p=571"},"modified":"2026-06-29T14:31:59","modified_gmt":"2026-06-29T06:31:59","slug":"en-hong-kong-compulsory-sale-old-building-investment-risks","status":"publish","type":"post","link":"https:\/\/hk.propmark.com\/hong-kong-real-estate-blog\/en-hong-kong-compulsory-sale-old-building-investment-risks\/","title":{"rendered":"After Lowered Compulsory Sale Thresholds: Is Buying Old Buildings for Buyout Still Profitable?"},"content":{"rendered":"\n

As land resources in Hong Kong become increasingly scarce, the government has actively promoted urban redevelopment through policy reforms. A key development is the amendment of the Land (Compulsory Sale for Redevelopment) Ordinance<\/em>, with relaxed thresholds officially implemented in 2026.<\/p>\n\n\n\n

This policy change has reignited investor interest in older districts such as Sham Shui Po, To Kwa Wan, and Yau Tsim Mong, where many investors are buying ageing properties in anticipation of developer buyouts at a premium.<\/p>\n\n\n\n

However, is this strategy truly a low-risk investment? Behind the policy incentive lies a range of hidden financial and legal risks.<\/p>\n\n\n\n

\n\n\n\n

1. What Has Changed in 2026?<\/h2>\n\n\n\n

Previously, developers had to acquire at least 80% ownership of a building aged 50 years or above before applying for compulsory sale.<\/p>\n\n\n\n

The revised framework introduces a tiered system:<\/p>\n\n\n\n

Building Age<\/th>Designated Areas<\/th>Non-Designated Areas<\/th><\/tr>
50\u201359 years<\/td>70%<\/td>80%<\/td><\/tr>
60\u201369 years<\/td>65%<\/td>70%<\/td><\/tr>
70+ years<\/td>65%<\/td>65%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

While this accelerates redevelopment, it also reduces the bargaining power of minority owners.<\/p>\n\n\n\n

\n\n\n\n

2. Three Hidden Risks of \u201cWaiting for Buyout\u201d<\/h2>\n\n\n\n

1. Valuation Gap at Tribunal Level<\/h3>\n\n\n\n

If no agreement is reached, cases proceed to the Lands Tribunal. The reserve price is determined based on:<\/p>\n\n\n\n

    \n
  • Existing Use Value (EUV)<\/li>\n\n\n\n
  • Replacement cost<\/li>\n<\/ul>\n\n\n\n

    In a declining market, the final valuation may be lower than the initial offer from developers, reducing expected returns.<\/p>\n\n\n\n

    \n\n\n\n

    2. Maintenance Liabilities and Unexpected Costs<\/h3>\n\n\n\n

    Older buildings often face structural and safety issues. Authorities may issue:<\/p>\n\n\n\n

      \n
    • Mandatory building inspections<\/li>\n\n\n\n
    • Window inspections<\/li>\n\n\n\n
    • Fire safety compliance orders<\/li>\n<\/ul>\n\n\n\n

      Due to fragmented ownership, some owners may refuse to contribute, shifting the financial burden to active owners.<\/p>\n\n\n\n

      These costs can significantly erode investment returns.<\/p>\n\n\n\n

      \n\n\n\n

      3. Risk of Developer Withdrawal<\/h3>\n\n\n\n

      Redevelopment projects may take years or even over a decade. Developers may withdraw due to:<\/p>\n\n\n\n

        \n
      • Market downturn<\/li>\n\n\n\n
      • High financing costs<\/li>\n\n\n\n
      • Difficulty in consolidating ownership<\/li>\n<\/ul>\n\n\n\n

        Investors may then face a \u201ctrapped capital\u201d scenario:<\/p>\n\n\n\n

          \n
        • Low rental yield<\/li>\n\n\n\n
        • Mortgage difficulties<\/li>\n\n\n\n
        • Poor resale liquidity<\/li>\n<\/ul>\n\n\n\n
          \n\n\n\n

          3. How to Assess Investment Potential?<\/h2>\n\n\n\n

          1. Unused Plot Ratio<\/h3>\n\n\n\n

          Properties with unused plot ratio offer higher redevelopment value.<\/p>\n\n\n\n

          \n\n\n\n

          2. Larger Site Assembly Potential<\/h3>\n\n\n\n

          Sites with multiple adjacent buildings are more attractive than single standalone properties.<\/p>\n\n\n\n

          \n\n\n\n

          3. Watch URA Projects Carefully<\/h3>\n\n\n\n

          Urban Renewal Authority (URA) projects offer certainty but limited upside due to fixed compensation mechanisms.<\/p>\n\n\n\n

          \n\n\n\n

          4. Conclusion: A High-Stakes Strategy, Not Passive Income<\/h2>\n\n\n\n

          The relaxation of compulsory sale thresholds creates opportunities, but this strategy is far from risk-free.<\/p>\n\n\n\n

          Before investing, ask yourself:<\/p>\n\n\n\n

          Can I hold this asset for 10 years without a buyout?<\/p><\/blockquote><\/figure>\n\n\n\n

          Only by preparing for the worst-case scenario can investors navigate this complex and uncertain market.<\/p>\n","protected":false},"excerpt":{"rendered":"

          As land resources in Hong Kong become increasingly scarce, the government has actively promoted urban redevelopment through policy reforms. A key development is the amendment of the Land (Compulsory Sale for Redevelopment) Ordinance, with relaxed thresholds officially implemented in 2026.<\/p>\n

          This policy change has reignited investor interest in older districts such as Sham Shui Po, To Kwa Wan, and Yau Tsim Mong, where many investors are buying ageing properties in anticipation of developer buyouts at a premium.<\/p>\n

          However, is this strategy truly a low-risk investment? Behind the policy incentive lies a range of hidden financial and legal risks.<\/p>\n","protected":false},"author":5,"featured_media":565,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[169],"tags":[837,762,841,843,839,845],"class_list":["post-571","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buying-selling-guides","tag-compulsory-sale-hk","tag-hong-kong-property-investment","tag-land-compulsory-sale-ordinance","tag-old-building-acquisition","tag-property-redevelopment","tag-real-estate-risks-hk"],"jetpack_featured_media_url":"https:\/\/hk.propmark.com\/hong-kong-real-estate-blog\/wp-content\/uploads\/2026\/06\/Hidden-Risks-of-Investing-in-Old-Buildings-for-Redevelopment.png","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/hk.propmark.com\/hong-kong-real-estate-blog\/wp-json\/wp\/v2\/posts\/571","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hk.propmark.com\/hong-kong-real-estate-blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hk.propmark.com\/hong-kong-real-estate-blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hk.propmark.com\/hong-kong-real-estate-blog\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/hk.propmark.com\/hong-kong-real-estate-blog\/wp-json\/wp\/v2\/comments?post=571"}],"version-history":[{"count":2,"href":"https:\/\/hk.propmark.com\/hong-kong-real-estate-blog\/wp-json\/wp\/v2\/posts\/571\/revisions"}],"predecessor-version":[{"id":613,"href":"https:\/\/hk.propmark.com\/hong-kong-real-estate-blog\/wp-json\/wp\/v2\/posts\/571\/revisions\/613"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/hk.propmark.com\/hong-kong-real-estate-blog\/wp-json\/wp\/v2\/media\/565"}],"wp:attachment":[{"href":"https:\/\/hk.propmark.com\/hong-kong-real-estate-blog\/wp-json\/wp\/v2\/media?parent=571"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hk.propmark.com\/hong-kong-real-estate-blog\/wp-json\/wp\/v2\/categories?post=571"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hk.propmark.com\/hong-kong-real-estate-blog\/wp-json\/wp\/v2\/tags?post=571"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}