Hong Kong’s government, which is boosting housing supply to ease soaring home prices, yesterday sold a site at auction 33 percent below estimates after stock markets were roiled by the US’ debt downgrade.
A group including Kerry Properties Ltd and Sino Land Co bought the land in the Sha Tin district on the first bid for HK$5.5 billion (US$704 million), below the HK$8.25 billion median estimate of five in a Bloomberg News survey.
The government accelerated land sales this fiscal year in a bid to stem a more than 70 percent gain in home prices since the beginning of 2009.
“The bidding sentiment was rather poor; there was little interest in bidding today,” said G.M. Ross, the auctioneer on the dayand deputy director of the Lands Department.
The government will take into consideration today’s auction result for land it plans to sell in the future, Ross said, declining to give details.
The government has sold 14 parcels through auctions or tenders during this fiscal year, which began in April, compared with 17 sites in the previous financial year, according to the Lands Department Web site.
“The surprising price shows developers’ long-term concerns under financial turmoil,” said Hong Kong-based Yu Kam-hung (余錦雄), senior managing director at CB Richard Ellis Group Inc.
“I expect a 20 percent price downturn in the coming two years,” Kam-hung said.
At least 970 homes will have to be built on the site that was auctioned yesterday, with a total buildable area of 95,690 square meters, according to the sales document.
The government set the minimum apartment requirement in June when it put up the Sha Tin site and two others for auction.
The price is equivalent to about HK$57,371.64 per square meter, derived by dividing HK$5.5 million by the total buildable area.
Apartments built on the site would need to sell at about HK$107,639.10 per square meter, 20 percent lower than the current luxury home price in Sha Tin, according to Yu.
Hong Kong is the world’s most expensive place to buy a home, with prime property 55 percent pricier than in London, Savills PLC said in a January statement.