Residential site in Tuen Mun receives just three bids in worst response to Hong Kong land sale since 2010
- Dismal response to government tender is the latest sign the world’s least affordable housing market is losing its lustre
A small plot of land in the New Territories has received the poorest response since Hong Kong’s government resumed land sales in 2010, in the latest sign the world’s priciest property market is on the wane.
The city’s Lands Department said it had received three bids from developers for the parcel of residential land in Tuen Mun after the tender closed at noon on Friday. No government land sale has received fewer bids in the last eight years.
The dismal response comes just three days after Hong Kong scrapped the sale of a luxury residential site on The Peak as a sliding stock market, rising interest rates and the escalating US-China trade war take a toll on buyers’ appetite.
The site in Tuen Mun has an area of 18,815 square feet, roughly equivalent to four basketball courts. It attracted bids from Sino Land, private firm Jantix Renewal Development and an unidentified company.
“The response was worse than our expectation,” said Victor Lai Kin-fai, a managing director at Centaline Surveyors, who predicted five bidders would compete for the small site.
Last December another site in the New Territories, a 2,160 square-foot plot in Sheung Shui, the smallest plot offered in government tender in a decade, drew 19 bidders. It was sold to Tai Hung Fai Group for HK$130 million.
“Market sentiment has changed significantly when compared with late last year. There was no US-China trade and no cancellation of a prime site from sale last year,” said Lai.
On Tuesday the Lands Department withdrew a luxury residential site on Mansfield Road, The Peak, from the market for the first time since 2016, reflecting caution among developers about the Hong Kong market.
The poor response to both plots has sparked concern about upcoming government sites offered for tender.
Knight Frank has revised down its estimated valuation of the phase-two residential development at the Ho Man Tin MTR Station by 10 per cent to HK$12.8 billion, or HK$20,000 per square feet. Its earlier forecast was HK$14 billion.
The tender for that site, expected to yield a total gross floor area of 639,382 square feet, will close at 2pm on October 22. It will comprise up to 1,000 units due to be completed in 2024.
The lot in Tuen Mun, which could yield a total gross floor area of 10,160 square feet, is expected to fetch HK$59 million to HK$71 million, or HK$5,500 to HK$7,000 per square foot, according to surveyors.
The lot is restricted to a building of no more than six storeys, according to the land sale document.
Hong Kong’s pre-owned flat prices has fallen for three consecutive weeks with a 0.1 per cent decline for the week ending October 14, according to a Centaline Property Agency index.
Home prices in the city dropped in August for the first time since March 2016, one of the first signs that the market could be heading for a downturn.
An index compiled by the government’s Rating and Valuation Department which tracks the prices of used homes dipped by 0.3 point to 393.9 in August, from 394.2 a month earlier.
Several investment banks have forecast a drop in Hong Kong’s house prices, some by as much as 15 per cent in the next year.