Sheung Shui site fetches HK$61m in first land auction in 12 months

The government yesterday sold a small piece of land for twice the floor price in its first auction in almost a year while an official report showed property sales rose to a 10-month high last month, indicating that sentiment may be warming up.

The Sheung Shui site attracted 11 bidders and was sold for HK$61 million, more than double the HK$30 million opening bid, and beat analysts' expectation of between HK$39 million and HK$50 million.

The auction was the first since May last year as developers shied away from buying land amid the weak property market and the global financial turmoil. Surveyors said the aggressive bids showed small developers were hungry for sites although key players were still cautious.

Coda Properties chairman Richard Tong Kwan-ming won the site on the 90th bid. The company plans to invest HK$20 million to turn it into an office with two shops. Since no residential units are planned for the development, Coda will get 40 per cent more space than if flats are added to the project.

As a gross floor area of 22,054 square feet of commercial property can be built on the 3,292 square foot site, the land price will be HK$2,766 per square foot. The location is a former water pump station opposite the Shek Wu Hui Post Office.

Mr Tong has been an active buyer in the investment property market, usually focusing on commercial and luxury residential properties in the urban area.

"I want to invest in urban areas, but there is no choice. So I have to pick the site in a prime location in a suburban area," he said.

"Demand for office and retail space is strong in Sheung Shui, where the parallel-import groups are active. Office rents may reach about HK$20 per square foot."

Auctioneer Chris Mills and property agents said the land sale result would not have an impact on property prices because of the site's small size.

Savills Valuation and Professional Services managing director Charles Chan Chiu-kwok said the site was well received by small developers because of its low investment cost and prime location. "It shows they are desperate for development sites," he said. "But it doesn't mean major developers are also interested in land acquisitions as they remain cautious due to the global financial crisis."

Meanwhile, the Land Registry said 11,148 property units were sold last month, up 38.28 per cent from March or 1.85 per cent from April last year. Sales value surged 41.03 per cent from March to HK$40.32 billion, 20.32 per cent higher than the HK$33.51 billion recorded in April last year. The figure is also a 10-month high since a sales peak of HK$57.48 billion in June last year.

By South China Morning Post