LI, Tao @ Hong Kong

Auctioneer Graham Martin Ross (2nd right, top) gets ready to announce the winning bid of HK$10.4 billion ($1.34 billion) by bidder No 10 after three calls with no counter offers at a government land auction in Hong Kong Wednesday. Edmond Tang / China Daily

Finished units could sell at a staggering HK$70,000 per square foot

On Wednesday the Hong Kong government auctioned a prime residential site on the region’s prized Peak for HK$10.4 billion, a sky-high unit price of HK$32,000 per square foot of gross floor area. The transaction added considerable steam to the local residential property market.

The project could end up including units for sale at HK$40,000 per square foot of finished gross floor area, if its proprietors develop it into high-rise apartments. It could even end up selling units for HK$60,000 to HK$70,000 per square foot, if the proprietors develop the project into individual houses, estimates Alvin Lam, executive director of Midland Surveyors Ltd.

The 251,000-square-feet site on Mount Nicholson Road, one of the most exclusive residential areas in Hong Kong, could be developed into a project holding a maximum gross floor area of 325,000 square feet.

The winning bid of HK$10.4 billion is consistent with analysts’ price estimates of HK$8.9 billion to HK$11.5 billion, which rose as the auction date approached.

Privately-held developer Nan Fung Group bought the site after a 45-minute competition with blue-chip developers New World Development Co and Sino Land Co. Developers, such as Cheung Kong (Holdings) Ltd, kept a low profile, even though before the auction they had shown interest in acquiring the plot.

Nan Fung will develop the site with Wharf (Holdings) Ltd in a 50-50 venture, said Donald Choi, the firm’s managing director, who described the winning price as “reasonable”, citing the “uniqueness” of the site in a “very rare” location.

He said that the two companies will use 30 percent of the gross floor area to build townhouses, and the rest for apartments.

Surveyors and analysts cheered the “favorable” result of the latest public land auction.

The “upbeat” land auction result affirms the positive outlook for the luxury residential market, which is supported by strong demand from local and mainland buyers, said a property consultant from CB Richard Ellis.

“We expect to see the luxury residential property price continue to follow an upward trajectory, in the short-term at least, and that the average luxury residential price in Hong Kong will have another 10 percent uplift over the second half of 2010,” said Craig Shute, senior managing director for Hong Kong, Macao and Taiwan at CB Richard Ellis.

“Many expect this price because there is no cheap land left in Hong Kong,” said Wong Leung-sing, associate director of research at Centaline.

Wong declined to estimate the selling price of the apartments that will be built on the Peak site, but said that the prices will be “very expensive” because land supply on the Peak is limited, and most Peak apartments now sell at around HK$40,000 per square foot.

Wong expects home prices in the city to continue to rise, at least until September, when the government introduces more measures to control rising property prices.

The nearly 38 percent rise in local property prices since the beginning of 2009 has prompted the government to introduce measures to curb speculation in the housing market.

China Daily

(HK Edition 07/29/2010 page3)

http://www.chinadaily.com.cn/hkedition/2010-07/29/content_11063560.htm