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A luxury residential site on Borrett Road in Mid-Levels was sold at below record market price estimates yesterday, a sign that developers are becoming more cautious about the outlook for the red-hot property market.
The sale came as the Lands Department announced a commercial site on the Hung Hom waterfront had been triggered for tender and the government said it would provide more regular updates on its land sales. 
With a maximum gross floor area of 435,292 square feet, the  Borrett Road site was sold to Cheung Kong (Holdings) for HK$11.65 billion in a slow auction.  
Analysts had expected the site would fetch between HK$12 billion and HK$15 billion.
Cheung Kong  also won another residential site in Ping Shan, Yuen Long, at the auction.
The  price for the Borrett Road site is the second highest  and close to the HK$11.82 billion paid  in 1997 for the Island Resort site in Siu Sai Wan. The accommodation value of HK$26,763 per square foot was the third highest.  
'I think it's a super luxury location,' Cheung Kong's deputy chairman Victor Li Tzar-kuoi said. 'We especially like the site because it's in a traditional upmarket area. 
'Secondly, it has  a view of Central and Victoria Harbour.   
'It's also below the fog line ... yet high enough to have a panoramic view.' 
He added that the transaction price was reasonable.
Li said that because of the prime location, the flats might be lease out when the project was completed. 
Cheung Kong beat four other contenders including Sino Land, Kerry Properties and Nan Fung Development for the site on the 42nd bid.
 With an opening bid of HK$9.5 billion, the 20-minute auction started off slow and the auctioneer cut the increment price to HK$50 million from HK$100 million on the fourth bid. 
'Property prices are high now, meaning that there is limited room for further increment. That explains why developers are willing to pay for the site at this [lower than expected] price,' Lanbase Surveyor's director Chan Cheung-kit said.
Vincent Cheung Kiu-cho, a director at property broker Cushman & Wakefield, attributed the lacklustre response and lower than expected transaction price to the tremendous investment costs involved. 
'The transaction price is set to weigh on the luxury  property market investors but backed by the positive investment sentiment, such as low interest rates and commodity prices, the impact is expected to be temporary,' Cheung said. 'As for properties on the Peak, Island South and the Kowloon station areas, the impact is deemed  very minimal.' 
He expects low to medium density residential blocks to be built on the site with a selling price of HK$35,000 per square foot. 
The Ping Shan site attracted 160 bids in 20 minutes. 
Cheung Kong again outbid five others  to win the site for HK$300 million, or HK$4,587 per square foot. 
Analysts had expected the site, which has a maximum gross floor area of 65,401 sq ft, to be sold for HK$200 million to HK$330 million. 
Chan said the site attracted more bids because the price tag was smaller and therefore the risk lower. 
'Property prices in rural areas are much cheaper than those in urban areas, which is more affordable for buyers,' he said. 
With a five-storey height restriction, Cushman & Wakefield said the site was expected to see a low-density development, with a selling price of about HK$7,500 per square foot. 
Financial Secretary John Tsang Chun-wah said the selling price of the Borrett Road site was not too high compared with analysts' estimates, but it showed market demand for land sites. 
Tsang said the government would announce its land sale plan every quarter, instead of every year. 
Noting that the land sites put on sale since April could provide about 3,000 flats, he said the list to be announced for the July-September quarter would result in more flats being built.  
Meanwhile, the government has accepted a minimum guaranteed bid of HK$2.139 billion for the Hung Hom site that has been triggered for tender. 
The 147,499 sq ft site will be open for tender between June 30 and  July 29. 
The site could be developed into a commercial and office complex with a gross floor area of 589,996 sq ft. 
Alvin Lam Tsz-pun, a director at Midland Surveyors, said the site could fetch HK$3.4 billion or HK$5,763 per square foot.



Cheung kong's hk$11.6b bid wins mid-levels site