Caution rules bidding at auction
A poor response to yesterday's land auction has further dampened already depressed sentiment and will not help the fragile recovery of the property market, according to analysts.
Residential prices are expected to fall as the market's sluggishness drew developers closer to renewed price competition to unload their properties, they said.
Chesterton Petty executive director Charles Chan Chiu-kwok said the poor results were due partly to the lack of property stimulus in the chief executive's Policy Address.
Midland Surveyors director Tony Chan Tung-ngok said developers' attitude towards the land auction was conservative. And the poor sentiment would cloud the property market until the first quarter next year, he forecast.
Caution ruled bidding at the auction, the fourth since the April resumption of land sales.
The auctioneer launched the sale with a 160,394 square foot site in Tin Shui Wai, at an opening price of $500 million.
Sino Land made the first bid, but only after warnings the site could be withdrawn in the absence of an offer.
Yet, the auctioneer had to cut the increment from $10 million to $5 million to get the third bid from Cheung Kong (Holdings).
After 30 minutes of subdued bidding with only 11 bids made, Cheung Kong beat two rivals to get the site for $555 million, representing an accommodation value of $692 per square foot.
Only two bidders were in the contest for the 21,615 sq ft site in South Bay Road, Repulse Bay, with an opening price of $120 million. Private firms E Wah Construction and Aik San Realty together defeated Emperor International Holdings with a final offer of $151 million, representing $6,876 per square foot, after 12 bids in 20 minutes.
New World Development director Stewart Leung Chi-kin said the Tin Shui Wai site was not attractive in terms of location and the Repulse Bay site was too small to bring about any impact on the whole market.
Henderson Land Development executive Augustine Wong Ho-ming said he believed property prices would remain stable in the wake of the auction. However, Cheung Kong and New World Development have decided to lower the price of some of their projects.
Cheung Kong announced a plan to reduce the average price of Vista Paradiso in Ma On Sha to $3,712 per square foot, down 13 per cent from May. Prices for Laguna Verde phase three in Hunghom were cut to $4,638 per square foot, down 11 per cent from March.
New World reduced prices of 56 units at Bijou Court in Mongkok to $4,700 per square foot, down 4 per cent from May.
Before yesterday's auction, Cheung Kong deputy chairman Victor Li Tzar-kuoi said the company was lowering prices to complement the Government's policy of making average homes more affordable.
Mr Li declined to comment on a possible price war.
'I will not comment on other developers' actions.' However, New World's Mr Leung said he was not worrying about a price war occurring, while Henderson's Mr Wong said the company had no plan to cut prices.
Property prices in Tuen Mun and Tin Shui Wan would be adversely affected as a result of yesterday's poor auction response, according to Chesterton Petty's Mr Chan.
