Hong Kong government recently reiterated that the Northern Metropolis Project will be accelerated. The entire project will be completed over 20 years, providing a total of 900,000 residential units, giving homes for 2.5 million people.
If private housing accounts for 30% of all the supplies, the total number of units will reach 270,000 units, an average of 13,500 units per year. To attract developers to participate this massive project, the land premium must be extremely low, and the experts estimated that it will be less than HK$500 per square foot (psf). If it is true, the sales price upon completion will be less than HK$ 5,000 psf.
The government understands that if the sales prices stay high, potential buyers will not choose to relocate to Northern 
Metropolis (NM). If so, NM will become a ghost town. Across the river lies Shenzhen, which offers a wide range of residential properties priced below HK$5,000 psf.
If NM residential units can only be sold under this price in the future, it means that Kingswood Villas in North New Territories is currently sold over HK$8,000 psf, having 40% room to fall. In fact, this is already a conservative estimation. As the government could even offer zero land premium or even subsidy to developers. If the land premium is zero, NM residential units can be set for sales at HK$4,000 psf upon completion and the developers will make a healthy profit on those kinds of low costs projects.
Except the massive supply from NM, there is still a potential supply of 100,000 new units for sale over the next three to four years. Add to those fifty thousand vacancy units, bringing the total supply to 150,000 units. If the market can absorb 15,000 units annually, it still needs 10 years to consume these units.
It is projected that NM residential supply will begin to add up to the new supplies and existing inventories, and it will cause the total number to rise to 28,500 units per year. This massive supply will exert significant downward pressure on property prices in Northern New Territories.
