Opinions vary on whether prices will drop at plots reserved for residents

Some experts think two sites at old airport site reserved for HK residents will drop in value, but none expect flats there to be any cheaper

PUBLISHED : Friday, 07 September, 2012, 12:00am
UPDATED : Friday, 07 September, 2012, 3:10am

Property-industry players were split on the impact of the government's announcement yesterday that flats to be built on two plots at the former Kai Tak airport will be reserved for individual buyers with permanent residency in Hong Kong.

Some said it would not make the land any cheaper for developers, but others predicted the sites would sell for up to 40 per cent less than they would if there was no restriction on who bought the flats. Even if the sites were cheaper, the latter said, the flats built on them might not cost any less than comparable homes elsewhere.

James Cheung, a director at Centaline Surveyors, does not think developers will be interested in the sites because they are a riskier investment under the new rule, which also applies to resales within 30 years of purchase.

"The potential buyers of their projects will be limited. They can't sell the flats to companies or foreigners," Cheung said. "There are many sites available for sale on the market. They would rather bid on them."

Midland Surveyors director Alvin Lam Tze-pun had a similar view, saying the price of the two Kai Tak sites would drop by 20 per cent, to around HK$4,800 per buildable sq ft, from HK$6,000. The sites are expected to sell for HK$2 billion to HK$2.22 billion.

But Lam said the sites would still be attractive to developers because of their central location and their proximity to the Kai Tak cruise terminal, which will be in operation next year.

He expects small- and medium-sized developers will be able to bid for the sites, which are small and do not require a large lump sum to bid.

Of the two land parcels, one has a site area of 83,658 sq ft and the other 92,420 sq ft. The two sites will yield about 1,100 flats of a size similar to those in Tai Koo Shing and South Horizons in Ap Lei Chau.

Lam said that while the sales restriction was likely to lower the land price for developers, it did not guarantee the flats would be any cheaper, because the government would not control the price of the flats.

Knight Frank's head of valuation and professional services, Alnwick Chan Chi-hing, agreed.

"The local demand for housing is very strong and we are facing a shortage of supply. It won't affect the sales of the flats once they are built and launched in the market," he said.

Vincent Cheung Kiu-cho, national director for Greater China at Cushman & Wakefield, echoed Chan.

"Only 20 per cent of flats at new projects are being sold to mainlanders, and mainland buyers are less than 10 per cent of the secondary market," he said.

He expects flats on the sites to sell for up to HK$10,000 per sq ft.