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.
Meanwhile, a 107,920 sq ft commercial site in Tung Chung was sold to the consortium formed by Swire Properties, Sun Hung Kai Properties, New World Development, Henderson Land and Hang Lung Properties, which developed the nearby Citygate outlet.
The consortium won the site for HK$2.33 billion or HK$4,314 per square foot, higher than most market expectations.
Chan of Lanbase said: "The location is good as it is next to Ngong Ping 360. And Citygate shopping mall attracts lot of tourists and shoppers. The demand for commercial space is strong,"
The site could build a commercial project with a gross floor area of 539,599 sq ft.
Kerry Properties is part of Kerry Group, the controlling shareholder of the SCMP Group, which publishes the South China Morning Post.