The government sold a housing site in Tuen Mun for 11 per cent below market expectations, signalling that developers are becoming more cautious about the outlook for the property market. Kerry Properties outbid seven other developers yesterday to win the tender for the site for HK$2.73 billion or HK$2,915 per sq ft. Kerry Properties said the price was reasonable and the local market had seen keen demand for large-scale property developments. Located next to Harrow International School at So Kwun Wat, and with a sea view, surveyors estimated that the land could have reached between HK$3.1 billion and HK$3.76 billion. 'Developers are pessimistic about the property market outlook,' said Chan Cheung-kit, a director at Lanbase Surveyors, who had estimated that the site was worth HK$3.5 billion. 'The fact that the site is restricted to 1,100 flats also affected the price.' He believed the developer could generate a reasonable profit if the selling prices at the project reached HK$6,000 to HK$7,000 per sq ft when it was launched on the market. Centaline Property sales director Joey Tam said the average price of flats at Avignon, a new project in the area developed by Sun Hung Kai Properties, was about HK$6,900 per sq ft. Vincent Cheung Kiu-cho, national director of valuation advisory services at Cushman & Wakefield, said developers were only willing to buy a site when it was about 10 or 15 per cent lower than the market price. 'Developers are not pessimistic but they have lots of stock on hand already, so unless the price is really cheap or low enough to hedge against the potential risk in future, they will not buy a site,' Cheung said. Surveyor Albert So Chun-hin expected that property prices would drop gradually following falling land prices in recent months. 'Developers have been aggressive in land acquisitions over the last few years as property prices continued to increase,' he said. 'But the result of the tender reflects that the developers have become cautious as property prices are no longer in an up cycle.' The 722,770 sq ft site in Tuen Mun is close to Cafeteria New Beach and the Gold Coast Hotel. It can be developed with a total gross floor area of 939,600 sq ft. The building height of the site has been limited to 85 metres. Kerry is controlled by the Kuok Group, the controlling shareholder of the SCMP Group, which publishes the South China Morning Post.