economy

Floor price for prime Hong Kong plot sinks 18%

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Floor price for prime Hong Kong plot sinks 18% BY: Clare Jim and Joy Leung

HONG KONG: Hong Kong sold a harbourfront residential plot for HK$ 8.33 billion ($1.06 billion) to a consortium led by major local developers, the Lands Department said on Wednesday, fetching less per square foot than a similar sale earlier this year.

The per-square-foot price of the prime plot in Kai Tak, site of the city’s former airport, was 18.4 percent lower than a record sale in the same area six months ago, in another sign of the city’s sizzling property market starting to moderate.

Last week, before the land sale, surveyors lowered their estimates by 5 to 10 percent from previously forecast, to value the site between HK$ 7.75 billion and HK$ 9.2 billion.

The Lands Department said a consortium including major developers Wheelock Properties, New World Development , Henderson Land Development and Empire Development Hong Kong (BVI) Ltd, won the tender.

There were seven other bidders, including CK Asset Holdings , China Overseas Land & Investment, Sun Hung Kai Properties, it added.

The site, with a maximum gross floor area of 53,383 square metres (574,610 sq ft), represents HK$14,502 per square foot. This compares to HK$17,777 per square foot that Sun Hung Kai Properties paid in May in the same district when it set a land sale record.

“The development size is big and the market risk is rising, so large developers forming a consortium helps to diversify development risk and sell flats in the future,” said Thomas Lam, executive director at real estate consultancy firm Knight.

In October, the Lands Department cancelled a luxury residential site at The Peak because the tendered premiums didn’t meet the government’s reserve price, a signal that developers were turning conservative on the market outlook.

Hong Kong private home prices also fell for the second straight month in September, as a global stock market rout and an intensifying Sino-U.S. trade war soured sentiment in the property market.

Residential plots in Kai Tak made headlines in late 2016 when China’s HNA Group outbid local and mainland developers at nearly double the market forecast in its first land purchase in Hong Kong.

HNA later bought three more land parcels in the same district but had to dispose most of them earlier this year to address a liquidity crunch.

($1 = 7.8304 Hong Kong dollars) (Editing by James Pomfret and Gopakumar Warrier)

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