PESSIMISM is expected to overshadow the government auction next week, with developers tipped to bid cautiously for the two plots of Crown land on offer. Analysts said the industrial-godown site in Kwai Chung could be withdrawn due to market uncertainty and the bleak prospects for that sector. Some surveyors said the other lot, a residential site in Tai Po, could draw little interest from developers who were cutting prices to unload their properties. The public auction of the two sites, which will be held on Thursday next week, could net about $350 million to $400 million for the Government. Analysts said the Government should fix conservative opening prices for the sites as over-pricing could scare bidders off. William Wong, partner of Brooke Hillier Parker expected the Tai Po residential site to fetch $260 million, representing an average price of $1,973 per square foot. He said the prospect of luxury residential units in Tai Po was not optimistic as developers recently reduced prices of new flats in the area. In the latest round of price cuts in Tai Po, agents said Hang Lung Development was offering its Parc Versailles at about $3,500 per sq ft while Sino Group had reduced prices of its Classical Gardens units to about $4,000 per sq ft. At the last public auction in June, a low-density residential site in Tai Po was almost withdrawn, and finally sold to Henderson Land Development at the opening price of $500 million, or an average price of $2,207 per sq ft. Pang Shiu-kee, director of S K Pang Surveyors said the Tai Po site was not conveniently located and the large supply of low-density apartments in the area would dampen bidding interest and potential appreciation of prices. 'With the last Tai Po site almost withdrawn, the Government should be careful in fixing the opening price,' he said. With a plot ratio of 0.8 times, the 164,689 sq ft residential site can provide a potential floor area of 131,751 sq ft. No more than 123 units can be built on it. Hang Lung's managing director Nelson Yuen Wai-leung said the Tai Po lot was a relatively small site so its sale could be seen as a suitable barometer for the market. Ambrose Liu, associate director of A G Wilkinson and Associates, put a price tag of $295 million on the Tai Po site, representing an average price of $2,239 per sq ft. The finished properties on the site would be three-storey apartments or houses, and demand for such units in Tai Po should increase in a few years' time as people upgraded their living spaces, he said. The 70,235 sq ft industrial-godown site in Kwai Chung has a potential floor area of 526,768 sq ft. Mr Liu predicted the site would fetch about $60 million, or an average price of $115 per sq ft. 'It's highly possible that the site will be withdrawn from sale due to the lack of bidding interest,' he said. Surveyors said the site's location on a slope would pose difficulties in development and involve higher costs for site formation. Mr Wong warned of a possible withdrawal of the site, which he expected to sell for $95 million at most, representing an average price of $180 per sq ft. A nearby godown site was sold for $170 million, or an average of $266 per sq ft, to Kerry Properties at an auction in December. Analysts said there was limited demand for industrial space in the territory following the removal of bases by most Hong Kong manufacturers to the mainland.
