Uncertain outlook drags on luxury flat site price

Firm wins bidding for upmarket development with offer at low end of expectations as leap in stamp duty makes property firms pessimistic

PUBLISHED : Saturday, 15 June, 2013, 12:00am
UPDATED : Saturday, 15 June, 2013, 3:29am

A luxury residential site in Ho Man Tin was sold at the lower end of market expectations yesterday, suggesting developers have turned conservative in acquiring sites for high-end homes, given the uncertain outlook for the market.

Wheelock Properties outbid 11 developers to win the 83,033 square foot site for HK$3.83 billion, or HK$9,875 per square foot. Surveyors had estimated it would fetch between HK$3.8 billion and HK$4.38 billion.

The price per square foot was 3.5 per cent less than that of a nearby site sold to Kerry Properties in March.

Shih Wing-ching, the founder of Centaline Property Agency, expressing the pessimism felt among many in the sector, said yesterday many property brokers were likely to face bankruptcy in the wake of recent government measures, including a doubling of stamp duty.

"Our commission income has dropped 60 per cent. We hope the government could revise the measures," Shih said.

However, Chief Executive Leung Chun-ying wrote in his blog yesterday the government would not relax the measures, as the supply of new land and housing had yet to rise significantly.

Vincent Cheung Kiu-cho, a national director for greater China at the consultancy Cushman & Wakefield, said: "Recent speeches by the government have made developers believe the cooling measures would not be withdrawn in the short term.

"The entry price for the flats at Wheelock's project may reach HK$20 million. It is difficult for the developers to sell luxury flats under the measures.

"Developers prefer mass residential sites in urban areas near an MTR station and with new infrastructure development, as it is easier to sell small flats."

Stanley Wong Yuen-fai, a non-official member of the Long Term Housing Strategy Steering Committee, said earlier this week that the government should impose more property-cooling measures unless flat prices dropped at least 20 per cent.

Centaline figures show 893 flats worth at least HK$12 million each changed hands from March to last month, 53 per cent less than in the same period last year. Average transaction values fell 56 per cent to HK$22.45 billion.

The firm said buyers of luxury flats were kept away by the introduction of additional stamp duties in October and the doubling of stamp duty in February. It said prices of luxury flats might drop 20 per cent this year.

The chairman of Wheelock, Stewart Leung Chi-kin, said: "It is difficult to forecast price movements. But I believe housing demand remains strong."

Leung said his company would spend HK$6.5 billion to develop a mid to upper-end residential project at its new site.

The site, at the junction of Fat Kwong and Sheung Foo streets, could yield a maximum gross floor area of about 387,741 sq ft.

Cheung said the tender result would affect the tendering for two low-density residential sites in Tuen Mun and Sha Tin's Kau To Shan, which started yesterday.

Meanwhile, Paliburg and Regal Hotels International won a commercial site in Ma On Shan yesterday for HK$662 million, or HK$4,027 per square foot. They plan to invest HK$1.4 billion to build a shopping centre.