Chinese Estates cuts Peak house prices in sale to Lau

PUBLISHED : Tuesday, 31 August, 2004, 12:00am
UPDATED : Tuesday, 31 August, 2004, 12:00am

Four houses on the Peak sold by Chinese Estates Holdings to its majority shareholder Joseph Lau Luen-hung had originally been priced at $500 million, at least 30 per cent higher than their final cost.

'The four houses have been on the market for the past few months. The company asked for more than $500 million,' a property consultant said.

The property developer on Sunday said it had agreed to sell the four houses at 31 Barker Road to Mr Lau for just $382.79 million. Mr Lau, an executive director of Chinese Estates, has a 62.84 per cent equity stake in the company.

The proposed transaction formed part of a series of asset disposals, amounting to $642 million, announced on Sunday. They included a number of luxury residential units on Hong Kong Island and certain art works. The asset sale proposals are subject to shareholder approval.

Chinese Estates was unavailable for comment yesterday but on Sunday said 'the recent months have revealed a slowdown in the transactions in relation to high-end residential properties'.

It said an unaudited pretax gain of about $332 million was expected through the sale. The revised sale price of the four houses translates into an average of about $28,000 per square foot, based on a floor area of 13,600 square feet as listed in the company's annual report.

However, Sun Hung Kai Research analyst Joseph Tang said the total area was more than 13,600 sqft because of some technical adjustments by the developer. He estimated the total area of the four houses at 17,680 sqft.

'Based on the estimated floor area, the proposed disposal price, representing an average of $21,650 per square foot, was close to our estimated value,' Mr Tang said.

Property consultants who had tried to sell the houses estimated the area to be 26,119 sq ft, making Mr Lau's purchase price an average $14,600 per square foot.