Auction bids demonstrate market faith
Healthy bidding at yesterday's government land auction has reassured property analysts that developers have confidence in the market despite the strained relationship between Britain and China. SARAH SHAW reports.
YESTERDAY'S government land auction gave a clear indication that confidence in the property market has not taken too much of a battering from the political storm.
The controversial sale of a site in Cox's Road, opposite the Kowloon Cricket Club, for residential use fetched a higher than expected $360 million while the second site at San Po Kong brought a ''reasonable'' $705 million.
The auction was well attended by both large and small developers and bidding was healthy, in contrast to the last auction, where lukewarm bidding reflected uncertainties over Sino-British relations.
''I think the result shows clearly that developers across the board have confidence in the market and that the fundamentals are sound,'' said Mr Michael Green, assistant director, property research, at SG Warburg Securities.
Two of the four sites under the hammer achieved a considerably higher price than had generally been forecast.
One went for a slightly lower price than predicted and the other for what Mr Lyall Alexander Webber, director of the valuations department at Vigers, called a ''reasonable'' price.
Mr Alexander Webber said that this reflected the fact that the sites were a ''fairly mixed bag''.
''What was encouraging was that all the big developers were there,'' he said.
He saw the outcome as an expression of controlled confidence.
Bidding was energetic for the Cox's Road site, a 15,016-square-foot residential site. The $360 million price was considerably higher than most forecasts.
''On reflection, it's a good price and not an outrageous one,'' said Mr Michael Clarke, managing director of Chung Sen Surveyors.
Mr Alexander Webber said it was a very high price but was a small site in a popular, expensive area, where very little property came on to the market.
Mr Green said it was an indication of developers' perception of the luxury residential market, which was holding up quite well.
The buyer was Amazing Wave Investment, owned by Emperor International Holdings and Mr Albert Yeung, Emperor's major shareholder.
Senior general manager of Emperor's property department, Mr Tony Tse, said the company planned to build a two-block, 19-storey luxury residential building over a podium and car park.
It was a superior site with green areas in front of it.
He said the price was higher than other government sites recently sold in the area, but added: ''We're quite confident. The final price was what we expected.'' For the second site, in San Po Kong, bidding reverted to characteristic brinkmanship, with bidders holding out to the last moment before raising their offer.
Unusually, the 33,293 sq ft site was designated simply for non-industrial use but had the stipulations that a refuse collection point of not less than 6,189 sq ft and a public library of not less than 23,411 sq ft must be included.
Because of this, price predictions varied wildly, ranging from about $520 million to $845 million.
It was eventually sold for $705 million.
The site was bought by Bright Success Investment, which sources say is a subsidiary of Nan Fung.
The price was ''reasonable'' but would depend on what it was used for, said Mr Alexander Webber.
It suggested office use and this would be in keeping with the trend of decentralising offices.
The third lot was the largest, a 113,021 sq ft residential site close to Yuen Long town centre, which went for a lower than expected $345 million to Good Faith Ltd, which sources say is a subsidiary of Sun Hung Kai.
Mr Green said that the nature of the area, which has cavernous marble underlying it, made it risky for medium and small developers, and Sun Hung Kai was not only big enough to absorb the risk but already had considerable development experience in the area.
Nevertheless, Mr Alexander Webber said it was a disappointing figure and that the Government would have been expecting a higher one.
The final lot, a 9,860 sq ft site in Kwai Chung designated for industrial/godown use also went for a surprisingly high price: $100 million.
The conditions of sale stipulated that up to 75 per cent could be used as office space - an unusually high proportion.
''It's the Hongkong version of an industrial/office building,'' said Mr Alexander Webber.
''But it's still a high price for that mix.'' ''All in all it was a good, stable result without driving the market silly,'' said Mr Clarke. See also Business Post Page 12