Developer caution hangs over land sale prospects

Two sites for tender in Sha Tin and Sai Kung could net the government up to HK$2.4 billion, but developers have turned cautious following the introduction of the latest cooling measures, Ricacorp Properties says.

A 92,463 square feet site at Kau To Shan, Sha Tin, intended for luxury homes, is expected to fetch a bid of about HK$1.3 billion or about HK$9,000 per square foot, while the 166,089 sq ft site at Sha Kok Mei in Sai Kung could sell for about HK$1.2 billion, or about HK$4,500 per square foot.

The Kau To Shan site can yield a total gross floor area of 142,386 sq ft, and the Sai Kung site a gross floor area of 249,133 sq ft.

"Developers will bid conservatively following the introduction of the new buyer's stamp duty because it has weakened demand," said Patrick Chow Moon-kit, the head of research at Ricacorp Properties.

Hong Kong Property Services (Agency) forecast that the official figure for home sales in December would drop by more than half to 3,147 deals.

"It will be the lowest since November 2008 when market sentiment soured as a result of the global financial crisis," said Jeffrey Ng Chong-yip, the senior executive director of Hong Kong Property Services (Agency).

Ng estimated the value of sales of secondary and new homes last month would amount to HK$37 billion.

Any flats built at the site on the top of Kau To Shan will command views of both the mountains and the sea, which was ideal for luxury homes, he said.

The Sai Kung site requires the winning bidder to build not less than 240 units and the development cannot exceed eight stories, according to the tender document.

"The valuation of the Sai Kung site will be affected as it is far from the beach and flats to be built on the plot will not command sea views," he said.

The tender for the two sites will close on Friday.