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SCMP Reporter

SWIRE Properties and CITIC Pacific picked up a 22,384-square-foot Yau Yat Tsuen commercial development site at yesterday's Government Land Auction for $2.85 billion.

  It was well below market expectations and politics was held mainly to blame.

  Analysts had expected property developers to smash the current $3.53 billion record for a plot of Crown land, paid last month for a 280,510-square-foot residential site at Diamond Hill.

  They went away after yesterday's surprise result shocked and hunting for explanations after having predicted the Yau Yat Tsuen site would fetch anything up to $3.8 billion.

  Commercial land prices tend to be more susceptible to political influences in Hongkong than residential land.

  That is because end-user demand for homes continues regardless of Sino-British relations, whereas trade is seen as potentially vulnerable to politics.

  All three other sites, two residential and one industrial, realised good prices.

  The four sites together reaped a total of $4.65 billion for Government coffers.

  Ms Julie Baldwin, Colliers Jardine director of valuation, said the $2.85 billion was below expectations, probably due to the large size of the site and its commercial.

   In times of political uncertainty, this was likely to detract developers as it was more risky than residential use.

  Residential '''is very safe'' due to the high demand from end-users.

  The price worked out to be an accommodation value of $1,913 per sq ft, which Ms Baldwin described as ''reasonable, but not bullish''.

  Mr Michael Clarke, managing director of Chung Sen Surveyors, said the result was a market reaction to the further breakdown in Sino-British relations following Governor Chris Patten's controversial decision to gazette his electoral reform bill for Hongkong.

  The Yau Yat Tsuen site, in Tat Chee Avenue, has a plot ratio of 6.7 and was designated for non-industrial and non-residential use.

  After the auction, Swire and CITIC announced they planned to build a giant shopping mall on the land, coupled with a relatively small amount of office space.

  The site is well positioned, immediately adjacent to Kowloon Tong Mass Transit Railway and Kowloon-Canton Railway stations.

  The surrounding area is mostly residential, with the notable exception of Hongkong City Polytechnic next door.

  A public transport terminal of at least 114,097 sq ft was included in the conditions of sale, as well as a 400-vehicle multi-storey car park.

  The second lot, a 69,427 sq ft non-industrial site in Ma On Shan, Sha Tin, was bought jointly by Sino Land and the Ng family for $990 million. This had a plot ratio of 6.7.

  There was considerably stronger interest in this site, which analysts had expected to fetch between $861 million and $960 million.

  Kerry Properties was the victor in the battle for the third lot, a 19,848 sq ft residential site in Hung Shui Kiu, Yuen Long, with a plot ratio of 6.4.

  This was bought for $155 million, in tune with market expectations of between $166 million and $175 million.

  Sun Hung Kai snapped up the final site, a 28,320 sq ft industrial/godown area in Sheung Shui, for $65 million. This had been expected to fetch between $49 million and $60 million.

  The price equated to an accommodation value of $459 per sq ft, significantly below the $507 per sq ft paid for a site close by a month ago,      but above the $345 per sq ft achieved in the vicinity in December at the beginning of the political deadlock.



Swire and CITIC pick up bargain