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.
Some 39,077 properties changed hands in the first half, 28.7 per cent fewer than the same period a year ago and the lowest figure in a decade.
Vincent Cheung Kiu-cho, national director of Greater China at consultant Cushman & Wakefield, said bidding interest was waning because the government had decided to increase land supply and since expectations for interest rates to rise had grown amid a possible cut in the stimulus programme of the US Federal Reserve.
The poor response caused surveyors to cut their estimates for the site. They now forecast the 295,160 sq ft site, to the south of Evangel College, will fetch between HK$3.34 billion and HK$4.1 billion, or HK$3,900 and HK$4,800 per square foot.
Bids for the site were received from Cheung Kong (Holdings), Sun Hung Kai Properties, Wheelock Properties, New World Development, Chinachem Group, Regal International and a consortium consisting of Sino Land, K Wah International and Nan Fung Development.
The plot could yield a total gross floor area of 855,964 sq ft and provide at least 875 flats. The site was the final one in Tseung Kwan O to be sold by the government this fiscal year.
Meanwhile, a residential site in Cheung Sha attracted 27 bids, with developers such as Swire Properties submitting bids. The 15,479 sq ft site could yield a total gross floor area of 6,191 sq ft and is worth about HK$40.25 million.