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Hong Kong Property

Hong Kong land prices are down to early 2015 levels, suggest estimates for Tai Po site

PUBLISHED : Thursday, 12 May, 2016, 7:54pm
UPDATED : Friday, 13 May, 2016, 9:28am

A large residential site in Tai Po is expected to fetch about 16 per cent less than a similar plot nearby as developers tread land acquisition with caution amid falling prices and dwindling sales.

The 308,765 square feet site at Chong San Road, Pak Shek Kok, which could yield a total gross floor area of 1.11 million sq ft, is expected to fetch HK$4.2 billion to HK$4.45 billion. The tender closes Friday noon.

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The price projected by surveyors translate into HK$3,800 to HK$4,000 per square foot – 16 per cent lower than what K Wah International paid for an adjacent site in September.

“Developers are unlikely to bid aggressively as this site will involve big investment and the area will see major land supply this financial year,” said Alvin Lam, a director at Midland Surveyors.

Seven residential sites, including this one, will be put on sale in Tai Po in the year to March 31.

Lam’s estimate of HK$3,800 per sq ft indicates land prices have returned to the levels seen early last year. In March last year, Sun Hung Kai Properties won a residential site at Fo Chun Road, in front of the site to be tendered on Friday, for HK$3,864 per square foot.

Lam estimated the total investment cost for the Chong San Road site could reach more than HK$10 billion. Assuming a construction cost of HK$5,000 per sq ft, he said, the total investment could amount to HK$9.8 billion, or HK$8,500 per sq ft, excluding interest expenses.

James Cheung, a director at Centaline Surveyors, said the site is worth HK$4.45 billion, or HK$4,000 per square foot.

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Kyle Bass, the hedge fund manager wagering a slowdown in China, has said Hong Kong’s property market is in “free fall” and the credit expansion in Southeast Asian emerging markets is set to unravel.

“Hong Kong is in a worse position than it was prior to the ’97 crisis today,” Bass was quoted by Bloomberg as saying at the SkyBridge Alternatives Conference in Las Vegas on Wednesday.

Developers in the city have lately been forced to launch projects at lower prices. On Thursday, Paliburg Holdings released the price list for six villas, ranging from 2,150 to 2,777 sq ft, at Casa Regalia in Hung Shiu Kiu, Yuen Long. Factoring in discounts of up to 23.5 per cent, the villas are going for HK$8,275 to HK$11,214 per sq ft, or HK$17.79 million to HK$30.3 million.