US rate hike fails to dampen Hong Kong developers

The US Federal Reserve’s decision to raise interest rates on Thursday failed to dampen developers, who have responded with gusto to the government’s tender of two sites.

The Lands Department said it had received 11 bids for a residential site in Tuen Mun’s So Kwun Wat and nine bids for a commercial site in Yuen Long.

“The response indicates the rate hike has had limited impact on developers’ acquisition plans,” said James Cheung, a director at Centaline Surveyors.

But in spite of the encouraging response, Centaline has revised down the valuation of the site by 11 per cent as the plot faces a potential judicial review that could stall its sale.

Victor Lai Kin-fai, chief executive of consultancy Centaline Professionals, said he has revised downward the estimated valuation to HK$4,000 per square foot from the original HK$4,500 per sq ft.

He said the So Kwun Wat site, which will yield a total gross floor area of 263,500 sq ft, will cost about HK$1.05 billion.

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The So Kwun Wat site attracted bids from developers including Henderson Land Development, Sun Hung Kai Properties, Cheung Kong Property, Wheelock Properties, Vanke Property (Hong Kong), Wing Tai Properties, HKR International and Sino Land.

The commercial site in Yuen Long, which could yield a total gross floor area of 500,000 sq ft, is expected to generate a bid of HK$1.35 billion to HK$2 billion, or HK$2,700 to HK$4,000 per sq ft.

Hong Kong’s secondary home prices have fallen to a 41-week low as buying interest has been dented by the anticipation of the US rate hike. The Centa-City Leading Index showed prices fell 0.67 per cent week on week to 137.3 for the week to December 13.