The Lands Department yesterday announced that the government had accepted the applicants' minimum guaranteed bid of HK$7.208 billion or HK$4,995 per square foot for the two sites.

Sino Land, Nan Fung Development, KWah International Holdings, Henderson Land Development and Sun Hung Kai Properties have denied responsibility for triggering the sale.

The sites, next to the Science Park and Sino Land's residential project, will be the first to be put up for auction this financial year when they come to market on December 28. They are also the first large-scale development sites up for auction since a residential site in Wong Chuk Hang was sold in October 2007.

Each site has an area of 2.1 hectares. Developers can build low-density residential buildings with a total gross floor area of 720,757 square feet on each site.

No large-scale sites have been triggered for sale in the past two years and only small sites in the New Territories have been sold.

Developers have turned up their noses at the government's land application list over the past two years, urging the government to lower the threshold for triggering sales from the list.

The government has received only seven applications for land sales so far this year, including the latest two applications for the Tai Po sites. That figure is far below the 55 and 26 bids received in 2007 and 2006, respectively.

The sudden action by the developer that triggered the latest auction might be related to a meeting between developers and Financial Secretary John Tsang Chun-wah last month, said Charles Chan Chiu-kwok, the managing director of Savills.

'The government may resume regular land auctions if property prices continue to rise sharply, but developers don't want this,' he said. 'It saves them from regular auctions if sites are triggered for sale.'

With the minimum bids for the Tai Po waterfront sites at HK$4,995 per square foot, this signals that the government has estimated them to be at least HK$6,200 per square foot.

Under the application list system, a developer can trigger an auction by making a bid that is at least 80 per cent of a site's government-set reserve price.

In 2007, the consortium led by Sino Land bought three sites next to the Tai Po sites for HK$10.16 billion.

Two of the sites on the waterfront were sold for HK$6,109 to HK$6,368 per square foot.

Knight Frank executive director Alnwick Chan Chi-hing believes the latest two sites could fetch HK$9,000 per square foot as luxury residential prices have risen sharply in the past two years.

'Property prices for Sino Land's project [that was sold in 2007] can fetch HK$15,000 per square foot if it is launched in the market now,' he said.

Charles Chan believes the winning bidders of the sites would develop houses and low-rise buildings to maximise profit.

'Prices of the houses can reach as much as HK$18,000 per square foot, while apartments can fetch up to HK$12,000,' he said.

Midland Realty data shows the average price of flats in the area was HK$7,500 per square foot, while that of houses was HK$18,000.

Sales in the luxury residential market fell significantly after the world record-breaking transaction at Henderson's 39 Conduit Road in Mid-Levels West at the end of last month.

The auctions of the two Tai Po sites were expected to spark another increase in transactions and prices in the luxury housing market if land prices in the sector met or exceeded expectations within the market, Charles Chan said.

Under the hammer

The two sites on the Tai Po Waterfront - next to the Science Park and a Sino Land residential project will be the first to be acutioned this financial year

Area of each site: 2.1 hectares

Total gross floor area of each site: 720,757 sq ft

Building height limit: 51.5 metres

Date of land auction: Dec 28

Minimum bid (per square foot): HK$4,995

Valuation of each site: HK$6.2b