Kerry win shows low prices being offered for sites

Kerry Properties has won a Ho Man Tin luxury residential site with a market-expected price of HK$11.69 billion, but the price is 18 per cent less than a neighbouring site sold for nearly three years ago.

"The market outlook has changed. The new round of cooling measures in the property market has driven  developers'  conservative offers," said Charles Chan Chiu-kwok, managing director at Savills Surveyors.

Kerry Properties outbid five developers to win the site with the highest bid of HK$10,233 per square foot. The price is cheaper than another residential site in the area sold to Sun Hung Kai Properties  for HK$10.9 billion, or HK$12,540 per square foot,  in 2010. However, data from Centa-City Leading Index, which tracks price movements on 100 major housing estates in Hong Kong, shows that property prices surged 53 per cent during the period.

Chan predicted that Kerry Properties could generate reasonable profit from the project if the average price of the flats reached HK$15,000 per square foot.

"It is similar to young housing estates in the area. It means developers did not expect property prices would grow when they submitted the offers," he added.
Chan Cheung-kit, a director at Lanbase Surveyors,  believes the conservative offer is also because of  rising construction costs in recent years.

The 259,165 sq ft site is at the junction of Sheung Lok and Sheung Shing streets. It could yield a gross floor area of 1,142,168 sq ft.