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Peggy Sito

PROPERTY developers are warily assessing the potential impact of new Government measures to regulate the conduct of land sales on the bidding process at public auctions.

  The measures were introduced on Thursday after 12 of the territory's leading developers formed an effective cartel at an auction of Crown land in May and snapped up tracts of prime real estate at prices well below those expected.

   Wai Siu-yu, general secretary of the Real Estate Developers Association of Hong Kong, said the body was assessing the potential effect of the new restrictions which will be put into effect at a sale of Crown land scheduled for Tuesday.

  Mr Wai said: ''It is hard to predict what will happen before the new measures are implemented at next week's land sale.''   He said the May 26 land sale was an exceptional case and that changes should not have been considered in response to such a special occurrence.

  A review of auction procedures was ordered by the Government after the 12 developers joined forces.

  Colin Lam, vice-chairman of Henderson Land, also described the May auction as an extraordinary, once-in-a-decade event.

  Mr Lam said he thought that the changes in the land auction rules could suppress prices.

  He said: ''The Government would achieve better prices if it did not have these new rules.

  ''They restrict the flexibility of developers to make commercial decisions during the auctioneering process. In some cases, this is likely to constrain the price developers are likely to bid.''   Other property developers, such as Cheung Kong (Holdings), Sun Hung Kai Properties and Wheelock Properties, declined to comment on the potential impact of the new measures.

   Despite his view that the new measures could adversely affect developers' commercial decisions, Mr Lam said Henderson Land was considering bidding for both sites.

  ''We are always cautiously bullish in Hong Kong,'' he said.

  Two lots of Crown land in Tai Po, scheduled for residential development, will be put on sale at the auction.

  However, the sale is expected to be a quiet affair mainly because of dampened market sentiment.

  Nicholas Brooke, a chartered surveyor and a member of the panel appointed by the Government to review conduct at auctions and the Government's land disposal arrangements, said he expected a subdued response.

  Mr Brooke said, however, that the new restrictions would not cause it.

  Instead, he said, the auction would be a a further demonstration of the uncertainty prevailing among the territory's property developers.

  ''You will see the market has lost direction,'' he said. ''I expect the bidding will be quiet.''   Property analysts also share the same concern.

  They expect the accommodation value of the two Tai Po residential sites to range between $2,000 per square foot and $3,500 per sq ft - far below the nearly $4,500 per sq ft achieved at the last sale of a residential site in the same district four months ago.

  Slightly more interest can be expected in the larger of the two sites, a 256,183 sq ft plot close to the Tai Po industrial estate which is expected to fetch $550 million to $700 million.

  The smaller 22,755 sq ft site in Tai Po Kau Hui is expected to sell for between $360 million and $400 million.



Developers wary of auction rules