Hong Kong scraps sale of The Peak land plot after bids failed to meet US$6.2 billion expected price
The government says bids received did not meet the site’s reserve price
A luxury residential site on The Peak has been withdrawn from sale for the first time since 2016, a sign that developers are increasingly cautious about the Hong Kong market outlook as a sliding stock market, rising interest rates and the escalating US-China trade war threaten to further dampen buying interest.
The Lands Department announced on Tuesday that it had rejected all five tenders received for the purchase of the plot on Mansfield Road, The Peak, after the tender closed on Friday as “the tendered premiums did not meet the government’s reserve price for the site”.
The market has expected the site, which could yield a total gross floor area of 404,300 square feet, to fetch a record HK$48.5 billion (US$6.2 billion), or HK$120,000 per sq ft. The plot could accommodate up to 65 three-storey houses of about 5,000 sq ft each and a couple of 12-storey apartment buildings with 3,300 sq ft on each floor.
“All factors indicate that the Hong Kong property market is heading for a downward adjustment. And the buyers of these super deluxe homes will be hardest hit by the fallout of the US-China trade war,” said Alvin Cheung, associate director at Prudential Brokerage.
“In such circumstances, developers will definitely be less aggressive when it comes to land acquisition.”
All factors indicate that the Hong Kong property market is heading for a downward adjustment. And the buyers of these super deluxe homes will be hardest hit by the fallout of the US-China trade war
Cheung attributed the failed land sale to rising borrowing costs, which would increase a developer’s financial burden given that two more interest rate increases are expected for this year and next.
