Hong Kong’s government will sell a residential building site tomorrow in its first auction since imposing the toughest measures yet to curb home prices in November.
The site on Ko Shan Road in the Hung Hom district, close to the site of the city’s former airport, may fetch HK$1.3 billion ($167 million), according to the median estimate of five surveyors and analysts surveyed by Bloomberg News. The estimates range from HK$1.07 billion to HK$1.53 billion.
Housing prices in the city, ranked the world’s most expensive place to buy a home by Savills Plc (SVS), have gained more than 65 percent in the past two years on record-low mortgage rates and an influx of buyers from China. The government in November increased property transaction taxes and pledged to boost land supply amid public protest that housing prices are becoming unaffordable and as the central bank warned about the risk of a “credit-fueled property bubble.”
“The home market has been quieting down recently and this will show in the auction,” said Alnwick Chan, Hong Kong-based executive director at property consultant Knight Frank LLP, who expects the site to fetch about HK$1.3 billion. “I don’t think we’ll see a very intense bidding process.”
Home prices rose 0.6 percent in the week ended April 17, halting a three-week, 1.6 percent-slide since mid-March when some of the city’s biggest lenders including BOC Hong Kong (Holdings) Ltd raised mortgage terms based on the Hong Kong Interbank Offered Rate, according to an index compiled by Centaline Property Agency Ltd, the island’s biggest closely held realtor.
More Land Sales
The government will sell a total of nine sites in the second quarter, generating 2,650 apartments, and is considering announcing its land sale schedule at the beginning of each quarter, Financial Secretary John Tsang said earlier this month.
Hong Kong may auction as many as 52 plots of land this year, Tsang said in his February 23 budget speech. The land could yield 16,000 units, almost 80 percent more than from land sold last year.
Most government land sales in recent years have been done through a so-called application system where developers’ offers to buy the sites trigger the auction. That system was put in place in 2002 to support falling home prices amid the Asian financial crisis that started in 1997. government-initiated land auctions were partially resumed last year.
New Rail Line
The site put up for auction tomorrow has buildable area of 14,262 square meters (153,514 square feet), according to the Development Bureau’s website. It will be the first land sold in Hung Hom since August, when Cheung Kong (Holdings) Ltd, controlled by Hong Kong’s richest man Li Ka-shing, paid a higher-than-estimated HK$9,600 per square foot for a 366,000- square-foot site.
A plan to extend the city’s underground railway to Hung Hom in 2015 and a lack of new supply in the area may draw more developers’ interest, according to Alvin Lam, a director at the surveying arm of Midland Holdings Ltd, Hong Kong’s biggest publicly traded realtor.
The government has sold only two residential sites in Hung Hom and nearby To Kwa Wan area over the last 10 years, generating about 438 apartments, he said. The per-square-foot price tomorrow will probably fall short of what Cheung Kong paid in August because of Ko Shan Road’s location, said Lam, who expects the site to fetch about HK$1.2 billion, or HK$7,800 per buildable square foot. -by Kelvin Wong
Category: Hong Kong