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Tack Hsin chairman Chan Shu-kit pays double the floor price to acquire 24,111 square foot site at Cheung Fu Street

The government sold a small site on  Lantau Island yesterday for $30.5 million, more than double  the floor price,  in the first land auction in nine months.

The 24,111 square  foot site with a floor price of $14.5 million, was sold to Tack Hsin Holdings chairman Chan Shu-kit.

The selling price, representing $3,162 per square  foot, exceeded market expectations of  $16 million to $20 million.

The site at Cheung Fu Street in Cheung Sha is designed for low-density residential development.

It has a development plot ratio of 0.4 based on town planning regulations and can provide a total gross floor area of 9,645 square feet.

There were seven bidders yesterday, most of which were small  developers.

Mr Chan won the site on the 33rd bid.

'We are happy with the results,' said Simon Yu Kin-man, an assistant director  at the Lands Department.

'It's too early to say  if we can reach the land reserve target of $30.5 billion  for the financial year or not since we have held one land auction.'

Mr Chan, whose company also runs a restaurant chain,  in 2000 bought a residential site in Cheung Sha  at an auction for $17.2 million. The site has been developed into 26 town houses  which are expected to be available  on the market this year.

'The price of the site [in yesterday's auction] is 10 per cent higher than our expectation but it's still reasonable,' Mr Chan said.

He said he  planned to develop six town houses on the site and launch them on the market in 2008.

The project would cost about $50 million, he said.

Apartments in the secondary market in Cheung Sha  were currently selling for $5,000 per square foot, he said.

As the area is popular among expatriates such as pilots, Mr Chan expects the town houses could be sold at $6,000 per square foot when completed.

'The  prices of houses in Cheung Sha range between $5,000 and $6,000 per square foot, so developers can have reasonable profits,' DTZ Debenham Tie Leung investment department director Kent Fong Chi-kit said. 'But it takes time to sell all units.'

Major developers, including Sun Hung Kai Properties and Cheung Kong (Holdings), as well as property consultants  Savills said the site  was too small to  give any indication of  market trends. 'The land auction has no impact on the property market,' Cheung Kong's executive director Grace Woo said. 'We are in no rush to sell our units,' she said. 'I expect  flat prices will rise by 8 per cent to 10 per cent this year.'

Premium site

The Cheung Sha site had a floor price of $14.5 million

Bid of $30.5 million represents $3,162 per square foot

Site was expected to go for $16 million to $20 million



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Small Lantau plot goes for $30.5m