A prime commercial-residential site in North Point's Oil Street sold for HK$6.27 billion, below market expectations, sparking concerns about the underlying strength of the local property market. Cheung Kong (Holdings) Ocean Century Investments outbid five rivals, including Henderson Land and Kerry Properties, to win the tender for the 84,896 sq ft site on a 50-year land grant. It was the highest tenderer, offering a premium of nearly HK$6.27 billion which was lower than the estimates given by seven surveying firms of between HK$6.47 billion and HK$9.07 billion. 'This shows that developers think property prices will remain stable ... and will not go up,' said Charles Chan Chiu-kwok, managing director at Savills Valuation and Professional Services. 'It doesn't mean they believe prices will fall. The land price was low mainly because the developer is required to build a hotel, which takes a longer time for returns.' The former Government Supplies Department headquarters in North Point has a total gross floor area of 755,633 sq ft and sold for HK$8,293 per buildable sq ft. At least 42.7 per cent of the floor area must be used for hotel purposes. The rest can be used for flats or offices. Assuming that the hotel part was sold for about HK$5,000 per sq ft, Chan said the rest of the gross floor area had a price of about HK$9,000, which was not too low. He said secondary home prices may be slightly affected as developers became less aggressive, while surveyors needed to revise their estimates for coming land sales downward by 10 per cent. A Cheung Kong spokeswoman said it was 'very happy to have won the site'. She said it would be the sole developer. Apart from the required hotel, it would build mainly luxury flats with views of Victoria Harbour. Both Knight Frank and Centaline Surveyors said restricting the site for mixed development increased the risk for developers and this had affected its selling price. It comes two weeks after the government sold a Sha Tin residential site for HK$5.5 billion, far below market estimates. According to Monetary Authority figures released yesterday, new mortgage loans drawn down last month fell by 16 per cent to HK$20.2 billion, compared to a month ago. New loans approved fell by 33.7 per cent to HK$17.6 billion last month - the lowest in 29 months. Sharmaine Lau Yuen-yuen, chief economic analyst at mReferral Mortgage Brokerage Services, said the decline was due to the government's mortgage-loan tightening, implemented in June.