As part of the measures to stabilise the property market, the government is holding land auctions to increase supply. Several sites are at prime locations suitable for luxury properties, and developers are taking the opportunity to increase their land banks in a segment they believe is still very promising. After this week's auction for the former Lingnan College site on Stubbs Road, a low-density site on Begonia Road and a site at Ngau Tam Mei in Yuen Long, another auction is scheduled for June 6. It will feature a prime location valued at about HK$10 billion on Borrett Road in Mid-Levels, plus sites in Ping Shan in Yuen Long and Tung Chung. In an auction on April 27, the Nan Fung Group and Wing Tai Properties won the bidding for the former Customs and Excise Service Married Quarters on Ko Shan Road in Hung Hom for HK$1.5 billion, or HK$9,934 per square foot. The estimated selling price of a development at the site is forecast to be more than HK$15,000 per square foot. The strong auction results have led some property owners to raise asking prices in the secondary market. Charles Chan, managing director of Savills Valuation and Professional Services, says competition and results at land auctions are expected to heat up. Although he expects property prices to slow down this year due to increased land supply and prices passing 1997 levels, he says there will still be growth of 10 to 15 per cent. 'It is not fair to compare today's home prices with those in 1997, as the economy has undergone many changes locally and globally,' Chan says. 'Although overall prices have exceeded 1997 levels, people still find it attractive to buy homes to fight inflation and to take advantage of low interest rates.' During the Easter and May 1 Golden Week holidays, new properties on the market included Sino Land's The Hermitage, Sun Hung Kai Properties' One Regent Place and Avignon, Cheung Kong's Uptown, and Henderson Land's The Gloucester. According to statistics compiled by Midland Realty, developers put up 1,540 new units for sale last month. This is equivalent to the total number of new homes offered in the first quarter of this year, reflecting developers' positive outlook. The Hermitage has almost sold out, with only a few apartments, including penthouses, still available. Kerry Properties' HK$10 billion Lions Rise project in East Kowloon is the largest new urban development. By early this month, it had already sold hundreds of units, with 10,000 potential buyers having visited the showrooms. Buggle Lau, chief analyst at Midland Realty, expects property prices to remain resilient despite sufficient market supply, as interest rates are expected to increase alongside rising inflation pressures and demand. The government also plans to announce a list of land sales on a quarterly basis. It also hopes to supply land to support the construction of 20,000 new apartments per year, though some doubt this target can be reached. According to government statistics from late last month, an estimated 59,000 unsold units will become available from completed developments or committed projects in the primary residential market. Lau points out that the secondary residential market also supplies a significant number of units. 'In addition, MTR Corporation property developments and land holdings available from other developers can offer an estimated 36,000 residential units. On top of that, the government may announce land sales at any given time subject to market demand, keeping land supply very flexible,' Lau says.
