Sun Hung Kai's HK$10.9b land buy beats estimates

HONG KONG: Sun Hung Kai Properties Ltd, the world's biggest developer by market value, paid HK$10.9 billion (HK$100 = RM42.61) for a residential site at a public auction in Hong Kong, beating estimates and underscoring that luxury home demand is withstanding government efforts to cool the market.

The Ho Man Tin district site was estimated at HK$8.41 billion, according to the median of seven analysts surveyed by Bloomberg News.

At HK$12,540 a square foot, it is the highest price in urban Hong Kong since its property market peaked in 1997, according to Centaline Property Agency Ltd.

Home prices have risen 41 percent since the end of 2008, prompting the government to tighten down-payment requirements for luxury homes in October to curtail speculation after record- low interest rates fueled the surge.
The Hang Seng Property Index, tracking six of Hong Kong's biggest develo pers, closed 1.8 per cent higher, reversing a 0.1 per cent drop.

"The above-expectations bidding price shows that the developers hold a positive outlook on urban sites for luxury homes, as currently it is obvious the supply for luxury homes is not sufficient," Wong Leung-sing, an associate director of research at Centaline, one of the city's biggest real estate agencies, said by phone yesterday.

The Centa-City Index, a measure of Hong Kong's home prices, last week fell 1.44 per cent, its biggest weekly drop in over 18 months, after the government's May 12 pledge to keep boosting land supply to cool the market. Hong Kong may add as many as 60,000 homes in three to four years, Financial Secretary John Tsang said on Wednesday.

The price "was not cheap but still reasonable," Fiona Wan, a spokeswoman at Sun Hung Kai, said by phone yesterday.

The firm expects to invest HK$18 billion to develop the site "into a luxurious residential area." The estimates ranged from HK$7.15 billion to HK$9.8 billion.

Home prices in Hong Kong rose the most among the world's major markets in the fourth quarter, property adviser Knight Frank LLP said in April.

Average prices climbed almost 28 per cent from a year earlier in Hong Kong, while in China they advanced 25 per cent, a global index compiled by the London-based broker showed. They rose 3.4 per cent in the UK and fell 3.1 per cent in the US, according to the April 21 survey.

Luxury home prices may rise 20 per cent this year as the economy expands and supply remains limited, real estate broker CB Richard Ellis Group Inc said in January.

By Bloomberg