Luxury flat outlook gloomy as auction disappoints

PUBLISHED : Saturday, 14 September, 2013, 12:00am
UPDATED : Saturday, 14 September, 2013, 2:51am

A Sha Tin luxury residential site up for tender yesterday attracted fewer than expected bidders due to weakening sentiment in the sector.

Despite being the last residential plot to be released for tender in Sha Tin's Kau To district, the site attracted just eight bids - one fewer than a tender in the area held at the end of last month.

"I'm not optimistic about the tender's result. I thought more developers would be willing to join the bidding as the previous site was sold at a low price," said Vincent Cheung Kiu-cho, national director of Greater China at property consultancy Cushman & Wakefield.

The government has released eight sites for sale since 2011. Once developed, the sites could provide a total of 1,600 to 1,900 luxury flats from 2014 to 2016.

"Developers will now be worried about the outlook for sales of luxury flats due to the plentiful new supply coming on to the market in a short period, as well as the competition that will come from the luxury project in Tai Po's Pak Shek Kok," Cheung said.

An adjacent site to the one up for tender this week was sold to Chun Wo Development for HK$2.71 billion, or HK$8,382 per square foot on September 4. That price was at the lower end of market expectations, and surveyors cut their forecasts for the new Kau To site after the earlier poor tender result from about HK$3.15 billion or HK$9,000 per square foot, to a range of HK$2.62 billion to HK$2.8 billion, or HK$7,500 to HK$8,010 per square foot.

A consortium of New World Development and CSI Properties, Wheelock Properties, Sino Land, Cheung Kong, and K Wah International were among the bidders.

Meanwhile, a smaller residential site at Sik On Street in Wan Chai attracted 15 bidders due to the lower overall investment cost. Sino Land, Metallurgical Corp of China, HKR International, Emperor International and Hopewell Holdings were among the bidders, and surveyors estimate the 2,239 square foot site could sell for up to HK$110 million. Tenders for the two sites close on Friday.