Tseung Kwan O site sold for HK$3.12b vs forecast HK$3.7b

The Lands Department sold a site for large-scale home development in Tseung Kwan O district for HK$3.12 billion ($400 million) in an auction on Tuesday, missing surveyors' estimates for the third consecutive time.

The property was estimated to sell for HK$3.7 billion, the median estimate in a survey of five surveyors and analysts by Bloomberg News. Their forecasts ranged from HK$3.3 billion to HK$4.4 billion.

The MTR-adjacent site at Tseung Kwan O Area 66A, which has a gross floor area of 73,662 square meters, was sold to Sun Hung Kai Properties Ltd on Tuesday at a price equivalent to HK$3,934 a square foot, according to calculations by Centaline Property Agency Ltd.

Centaline's senior regional sales director Ken Lee Yuk-shing said Tuesday's lower-than-expected winning price shows how cautious Hong Kong developers are about obtaining lands these days, which will have an adverse effect on second-hand home sales in the city.

"Investors will be more conservative in their offering prices under such circumstances and more homes are expected to be put up for lease rather than for sale," said Lee.

However, Centaline Surveyors Managing Director Victor Lai Kin-fai said size restrictions on the Tseung Kwan O site may have discouraged interest as the winning developer will be required to build between 960 and 1,010 residential units on the plot to ensure an adequate supply of flats for the middle class.

The government also sold two smaller suburban residential parcels at Tuesday's auction. A site in Yuen Long with a maximum gross floor area of 11,192 square meters was sold for HK$361 million. Meanwhile, a plot in Sai Kung town measuring 2,400 square meters went under the hammer for HK$121.5 million.

The public land auction on Tuesday was Hong Kong's fifth so far this fiscal year with auctions and tenders having fallen short of market expectations as developers' interest was dampened by market sentiment.

On August 9, the government auctioned off a Sha Tin Kau To land site for HK$5.5 billion at the opening bid, 33 percent lower than market estimates after global stock markets were roiled by the US debt downgrade.

And during the previous tender on August 25, the government sold a site in North Point at a premium of about HK$6.27 billion, which also fell short of the HK$6.47 billion to HK$9.07 billion estimated by the surveyors.

A Centaline report released September 2 showed that 5,439 private residential transactions were recorded in Hong Kong last month. Although it was slightly higher than July's 5,254, the transaction volume in August was the second lowest since 2010 in comparison with an average of about 10,000 home transactions per month during the past two years.

Buggle Lau, chief analyst of Midland Realty, said the land auction on Tuesday achieved fair prices that reflect market conditions as well as developers' confidence in the market.

Lau added that with the launch of several new real estate projects in the next two months, the property is expected to improve - as are first-hand residential sales.

litao@chinadailyhk.com

China Daily

(HK Edition 09/07/2011 page2)