A Tseung Kwan O residential site was sold yesterday for the lowest price in the area for more than three years, a sign that developers have turned pessimistic in their outlook for the housing market.
Chinachem bought the 283,115 square foot site near Evangel College for HK$3 billion, or HK$3,653 per square foot. The 10 sites sold in the area since 2010 ranged in price from HK$3,810 to HK$4,917 per sq ft.
Although the new site has a better view, it went for 15 per cent less than a nearby site sold to Wheelock Properties for HK$4,301 per sq ft in April.
"It's really unexpected," Vincent Cheung Kiu-cho, national director for greater China at Cushman & Wakefield, said. "Land sites in the neighbourhood were sold for over HK$4,000 per buildable square foot in the past year.
"But it has suddenly dropped below HK$4,000 per sq ft, with some existing Tseung Kwan O landlords such as Sun Hung Kai Properties and Wheelock making bids that are lower than the amounts they were willing to pay before. I'm very surprised."
The only possible reason for the low bids, he said, was concern about an imminent end to stimulus by the US Federal Reserve.
Charles Chan Chiu-kwok, managing director at consultancy Savills, said: "The poor result shows developers are worried property prices will drop because of the increase of land supply and that cooling measures will not be removed in the short run. They are pessimistic on the outlook, as the Federal Reserve signalled the end of quantitative easing."
Financial Secretary John Tsang Chun-wah said last week that interest rates in the city may rise before the Fed increases US rates, but it was too early to decide if the property curbs needed to be rolled back.
Chinachem plans to invest more than HK$7 billion in building a residential project with a shopping mall on the site, which could provide 840 flats.
Cheung said the tender would affect upcoming land sales.
He revised his estimate for the neighbouring waterfront site in Tseung Kwan O, for which tendering will close on July 5, from HK$4,600-HK$4,700 per sq ft to HK$3,900-HK$4,000 per sq ft.
Meanwhile, Wah Yip - a firm chaired by Albert Chow Nin-mou, formerly deputy managing director at Cheung Kong - outbid five other developers to win a residential site in Tuen Mun for HK$156.8 million, or HK$3,241 per buildable square foot, in line with market expectations.