Hong Kong property

Lai Sun buys Tseung Kwan O waterfront site for HK$2.8b

PUBLISHED : Thursday, 29 November, 2012, 12:00am
UPDATED : Thursday, 29 November, 2012, 3:46am

Lai Sun Development made its first land acquisition in 18 years yesterday with a price that beat expectations in a housing market softened by recent government measures.

The Lands Department announced the developer had outbid five others for the residential site on the Tseung Kwan O waterfront, paying about HK$2.83 billion, or HK$4,929 per square foot, slightly more than market expectations of up to HK$2.75 billion.

Chew Fook Aun, deputy chairman of Lai Sun, said: "Our gearing ratio is only 7 per cent, and we have sufficient capital. But we have only three development projects on hand.

"We need to grab the development opportunities."

He said the bid was reasonable, as prices of new homes in the area have reached HK$11,000 per square foot. The project's total investment cost is HK$6 billion.

"The government's measures have affected property sales. But prices remain stable, as interest rates are low," Chew said.

Vincent Cheung Kiu-cho, national director for Greater China at Cushman & Wakefield, said: "Government increased land supply, and major developers turned cautious, giving other developers an opportunity to replenish their land banks."

Meanwhile, a commercial site in Kowloon Bay that attracted 20 bidders was sold to Tony Lau Hon-chung, the brother of lawmaker Sophie Leung Lau Yau-fun, for about HK$1.82 billion, or HK$5,458 per square foot, near the low end of market estimates.

Lau is familiar with Kowloon Bay, as he and his family own an industrial building near the site.

While some developers continue to acquire land, more small property agencies are expected to close their operations as they struggle to survive in a dramatic market downturn.

"Small operators with five to 10 branches are bound to be hit severely or have to shut their doors if market conditions persist unchanged," said Lee Wee Liat, the head of research at BNP Paribas Securities.

His prediction comes after Ricacorp Properties said it expected the number of its agents to decrease 10 per cent over the coming months through attrition and would not renew the leases for branches with a monthly rental of HK$300,000 or more.

Shares of Midland Realty fell 0.28 per cent to close at HK$3.51 yesterday, capping a 21.65 per cent fall since the government announced on October 26 a new 15 per cent stamp duty on corporations and non-permanent residents who buy homes in the city.

While residential transactions fell by half last month, confirmor sales of industrial units reached a record high of HK$677 million.

The sector is not affected by the new stamp duty, Ricacorp said.

In confirmor deals, properties are resold before the original transaction is completed.