Midlevels luxury site sold for HK$11.65b
Sales price below estimates after restrictive measures and higher mortgage rates
The Hong Kong government sold a residential site in one of the city’s most exclusive areas below the estimates of surveyors after home sales fell over the past five months following restrictive government measures and higher mortgage rates.
During city’s third land sale of the fiscal year on Thursday, the luxury residential site on Borrett Road in the Midlevels district on Hong Kong Island was sold for HK$11.65 billion. Cheung Kong (Holdings) Ltd claimed the site after 42 rounds of bidding.
The price was equivalent to HK$26,763 per square foot, according to data provided by Centaline Property Agency Ltd.
However, it fell below the HK$12-15.2 billion range forecast by five analysts polled by Dow Jones Newswires, as well as lagging the average HK$12.8 billion forecast polled by Reuters and the HK$13 billion median estimate polled by Bloomberg News.
Noting that it is still too early to conclude that the luxury home market in Hong Kong has peaked, James Cheung, director of Centaline Surveyors, said after the sale that the lackluster result reflected the fact that Hong Kong developers have become very cautious towards expensive land prices.
“Residential flats built on the site could be sold at more than HK$40,000 per square foot. Detached houses would even fetch HK$50,000 to HK$60,000 per square foot,” Cheung estimated.
Auctioneer G.M. Ross, deputy director of the Lands Department, said the land sales result “reflects the prevailing market condition.”
In a striking comparison, however, another piece of land at Ping Kwai Road in Yuen Long attracted fierce competition from developers.
After 160 rounds of aggressive bidding, the parcel in New Territories was sold for HK$300 million, equivalent to HK$4,587 per square foot.
The selling price was 2.3 times that of the opening bid of HK$130 million, which also beat the HK$220 million median forecast polled by Reuters.
“It doesn’t necessarily suggest that home prices in the New Territories will rise sharply in the coming years,” Louis Chan, managing director (residential) of Asia Pacific at Centaline Property Agency, told China Daily. He said it is the “thin size, low investment and fewer risks of the land piece” that aroused the zeal of developers towards the site.
However, Albert Wong, senior executive director at Midland Holdings, predicted that unit sales on the Yuen Long site will exceed HK$7,000 per square foot – close to the previous high in 1997 in the area when the city’s home prices peaked.
Wong added that luxury residential prices will rise at a faster pace than urban areas in the next two or three year. He said it is likely to grow about 20 percent a year, compared with a 10 percent annual price gain on Hong Kong Island.
To cool down the city’s overheating property market, the Hong Kong government has vowed to boost land supply this year. It will in total sell 12 sites in the second quarter, among which nine will be for residential development.
On May 12, the government sold three residential sites located on Hong Kong Island, Kowloon and the New Territories. All these sites fetched high prices despite a series of government measures aimed at cooling the market.
China Daily
http://www.chinadaily.com.cn/hkedition/2011-06/10/content_12669058.htm