City's developers, buyers bullish over property market's near future outlook

The Hong Kong government's latest land sales have drawn enthusiastic response from developers with home prices climbing to record highs, suggesting that both developers and home buyers remain bullish about the city's property market outlook, while betting on no further government curbs ahead.

One site located at Kau To Shan hill, a luxury residential area in Sha Tin, attracted 10 tenders while another site for sale on Peng Chau, a small island located off the north-eastern coast of Lantau Island, also attracted eight tenders before the two land sales offers closed on Friday, according to the Lands Department.

"The latest lands sales drew great responses from Hong Kong developers over just months ago," said Charles Chan, managing director of Savills Valuation and Professional Services.

"Unlike another site on Peng Chau (which was) sold in April that only attracted two tenders at that time, developers once again (are) starting to compete for land banks in Hong Kong, suggesting the market is bullish on an even higher property prices in the future," Chan told China Daily in a telephone interview.

Vincent Cheung, national director of Valuation and Advisory of Cushman Wakefield in Hong Kong expected the Kau To Shan site's average floor price to fetch HK$7,600 to HK$11,000 per square foot, adding that although there had been several land sales in the district in the past, they will not dilute the attractiveness of luxury sites.

Savills' Chan estimated that the price of Peng Chau site, which is located on the island that is far away from the downtown area, to reach HK$900 per square foot, also higher than the HK$514 per square foot of the earlier Peng Chau site sale in April.

"Hong Kong government didn't come up with any new policies to curb the property prices this year. The market generally expects the prices to remain stable, which also leaves room for price hikes in the future," Chan added.

The city's economic slowdown didn't effectively cool off the city's property market, Hong Kong government said earlier this month. After the city's home prices rose by a cumulative 4 percent between March and June in 2012, Hong Kong's overall residential prices by late June have surpassed the 1997 peak by around 16 percent.

Property prices further increased after the government in July announced that up to 5,000 non-public housing tenants would be allowed to buy apartments under the Home Ownership Scheme (HOS) without paying the normal land premium.

The latest Centa-City Lending Index (CCL) released on Friday has reached 107.18 according to Centaline Property Agency. The index, which measures local secondary residential property prices, has far exceeded the previous highest record of 102.93 in October 1997.

Hong Kong's property prices have increased by around 85 percent Since January 2009, Franco Leung, an analyst with Moody's Investors Service wrote in an email report dated August 23.

"At current property prices, the risk of government regulatory intervention increases because the government may try to introduce new measures to stabilize property prices," said Leung.

litao@chinadailyhk.com

(HK Edition 08/25/2012 page2)