Caution expected over bidding for residential sites in Sha Tin and Yuen Long

PUBLISHED : Wednesday, 28 August, 2013, 12:00am
UPDATED : Wednesday, 28 August, 2013, 5:29am

Developers are expected to take a cautious approach to bidding for two residential sites in Sha Tin and Yuen Long this week.

Surveyors estimate a site at Kau To, Sha Tin, will fetch bids ranging from HK$2.68 billion to HK$3.01 billion, or HK$8,300 to HK$9,300 per sq ft.

The site is on Lai Ping Road and covers 354,136 sq ft. It could be developed into luxury flats with total gross floor area of 323,308 sq ft.

The last transaction in the area was concluded earlier this month, when a nearby site was sold to HKR International and Nan Fung Development for HK$1.22 billion or HK$9,071 per sq ft.

"But the view offered by this latest site is better than the previous one. It also has a lower development plot ratio," said Vincent Cheung Kiu-cho, national director for greater China at valuers Cushman & Wakefield.

Cheung forecasts that developers will be cautious in their bidding.

"The luxury residential market has suffered the most since the government introduced [the 15 per cent additional] buyer's stamp duty [for corporate and non-permanent resident buyers in October]. Developers may still be interested in bidding for the luxury residential site in Kau To, but their offers are not likely to be aggressive."

With property sales having slowed, developers may take longer to sell all the flats in the projects, he said.

"It could take more than two years to sell all the flats, which would affect the price developers are willing to pay for the plot."

Cheung expects the site to be sold for HK$3.01 billion, or HK$9,300 per sq ft. Patrick Chow Moon-kit, head of research at Ricacorp Properties, echoed the view that developers would be cautious in their bidding.

"As expectations have grown that the United States Federal Reserve will begin to wind down its programme of quantitative easing, developers are expecting higher development costs and financial risks. They will submit lower offers for land acquisition," he said.

The Yuen Long site covers 46,317 sq ft and could be used to build a development with a total gross floor area of 46,317 sq ft.

Since the site was next to industrial buildings, this would affect developers' offers, said Chow, who expects a winning bid of around HK$602 million, or HK$2,600 per sq ft.

Alvin Lam, a director at Midland Surveyors, believes the site could be sold for HK$648 million or HK$2,800 per sq ft, with bidding constrained by the fact that it is some distance from Long Ping MTR station and the scale of development is small.

Tenders for the two sites will close on Friday.