Sale of Tseung Kwan O site garners few bids amid weak market sentiment
Seven developers show interest in tender amid uncertainty about direction of market as expectations for interest rates to rise mount
The last Tseung Kwan O residential site of the current land sale programme failed to attract a large number of bids yesterday, in fresh proof that developers are losing their appetite for land acquisitions amid market uncertainty.
Only seven bidders joined the auction for the waterfront site, the same number that joined the tender last month for a Tseung Kwan O site that did not have a view of the sea.
"It shows developers have turned pessimistic on the market outlook," said David Ng Ka-chun, head of China and Hong Kong property research at Macquarie Capital Securities.
Several sites have been sold at prices below expectations in recent months. The previous Tseung Kwan O site, adjacent to the waterfront site whose tender closed yesterday, was sold in June to Chinachem Group for HK$3 billion, or HK$3,653 per square foot. That price was the lowest in the area in more than three years.
"Developers have turned conservative about land acquisitions as property sales have dropped significantly," Ng said.
"With the prevailing market sentiment poor, developers may need to cut their asking prices in future. That's why they have begun to offer less for sites." According to the research department of Midland Realty, monthly property transactions have been low, hovering between 4,000 and 5,000 units ever since the government introduced cooling measures on February 22.