Low bid wins 2nd land auction
Updated: 2010-05-25 07:38
By Oswald Chen(HK Edition)
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A land parcel in Fanling, New Territories is sold to Hong Kong Ferry Ltd for HK$1.33 billion as the gavel falls at Monday's auction in Hong Kong. Edmond Tang / China Daily |
Despite good turnout, property developers remain cautious
The government Monday sold a site in Fanling, New Territories in its second land auction in the current fiscal year, for HK$1.33 billion, which reached only the low end of market estimates of HK$1.32 billion to HK$1.6 billion, as developers generally remained cautious after the government recently announced a series of measures, including increasing the land supply to curb soaring home prices.
The winning bid was only 26.2 percent higher than the auction upset price of HK$1.0538 billion.
Though property market sentiment is still cautious, more developers' representatives attended this auction, among them Victor Li, executive director of Cheung Kong (Holdings) and Gong Renxin from Chinachem Group.
The bidding was muted in the beginning of the auction as the auctioneer had to warn five times that the site would be removed from bidding if the bidding price were lower than the government's valuation. After the bid price rose above HK$1.21 billion, the auctioneer lowered the incremental bidding price from HK$20 million to HK$10 million. By then, the bidding gained momentum.
Henderson Land Development Company's subsidiary, Hong Kong Ferry (Holdings) Company Limited, successfully bought the Fanling site for HK$1.33 billion.
The Fanling site has a total area of 95,800 square feet. Hence, the transaction price translates into an accommodation value of HK$2,361 per square foot of finished gross floor area.
The Lands Department Deputy Director G.M. Ross, who was also the auctioneer, said Monday that the administration is satisfied with the fetched price, as it reflects the market price.
He added that as the Fanling site is relatively small, the purchase price should not exert significant impacts on the results of the upcoming auctions of the Ho Man Tin Valley Road Estate and Midlevel Mount Nicholson Road land parcels.
Hong Kong Ferry said that it will undertake the residential project on its own, as it will not resort to bank borrowings to finance the deal given that the company is flush with cash.
"The company plans to build 700 flats of about 600 square feet each, which involves a total investment of HK$2.3 billion," said David Ho, group general manager of Hong Kong Ferry.
Property analysts said that the auction price was within expectations and that, as a result, they envisage that the market prices and transaction volumes in the Northern District's property secondary market will remain stable.
"The land cost, together with the construction and interest costs, mean that Hong Kong Ferry has to sell the flats at least around HK$4,000 per square foot of finished gross floor area to make a decent profit. Existing homes in the Northern District, where Fanling is located, are currently selling at around HK$3,100 to HK$3,500 per square foot. As the developer can sell the flats on the Fanling site only after two years, this means that the fetched land auction price is reasonable," 18 Property Agent Limited Chairman Edward Cheung told China Daily.
China Daily
(HK Edition 05/25/2010 page3)