Hong Kong land prices have surged in the past two months as local major developers returned to land acquisition at an aggressive pace amid brisk sales at new projects. Sun Hung Kai Properties (SHKP), Sino Land and Hong Kong Ferry (Holdings), which is 33.4 per cent owned by Henderson Land Development, have snapped up three residential sites in government tenders since July, compared with two plots sold to local big players in the whole of 2014 and 2015. The latest three sites were sold for 20 per cent to 35 per cent above market expectation, in stark contrast to previous plots sold at below-market rates. Thomas Lam, head of valuation and consultancy at Knight Frank, said the premium paid recently by local developers was due to an improvement in market sentiment. “The positive land sale outcome is likely encouraged by the reduction in market uncertainties,” he said. Home-buying confidence has been on the rise in view of the US Federal Reserve’s uncertain time frame for an interest rate hike, while Britain’s vote to leave the European Union has had a minimal impact on the market, Lam said. On August 8, Hong Kong Ferry teamed up with Walter Kwok Ping-sheung, the former chairman of Sun Hung Kai Properties, to secure a plot at Castle Peak Bay, Tuen Mun, for HK$2.7 billion. The HK$4,085 per square foot price tag represents a 20 per cent premium on the high end of market expectations and is 22 per cent above what Wing Tai Properties paid for a site in the same area in June. Meanwhile, SHKP bought a residential plot in Sha Tin for HK$2.7 billion, which represents a land cost of HK$5,448 per sq ft - 35 per cent above the market forecast a month earlier. SHKP’s aggressive bid came a month after Sino Land’s acquisition of a residential site in Pak Shek Kok, Tai Po, for HK$1.62 billion, or HK$3,932 per sq ft, which was 20 per cent above market value. Smaller developers have also been paying a huge premium recently. Just last week, Gingerlily Investment, a company owned by local investor Angela Leong, purchased a residential site at Tsing Ha Lane, Tuen Mun, for HK$1.4 billion, or HK$6,800 per square foot, which was 66 per cent higher than Hong Kong Ferry paid for their nearby site. And on Tuesday, Road King Infrastructure defeated 13 competitors to win a residential site in Au Tau, Yuen Long, at 17 per cent above the high end of the market. The Lands Department awarded the site to Power Truth Development, a subsidiary of Road King, for HK$988.88 million. The price tag translates into HK$2,690 per square foot which was higher than the market expectation of HK$2,000 to HK$2,300 per sq ft. The company said it planned to build 600 flats with unit sizes starting at 300 square feet on the site, which would yield a total gross floor area of 367,569 square foot. Power Truth expects the total project cost to be about HK$3.1 billion, inclusive of the land price. Other bidders for the site included Sun Hung Kai Properties, Sino Land, Henderson Land Development and Cheung Kong Property. The rules of the game in the land market have been changed Wong Tsz -choi, a senior director at CBRE Hong Kong “The rules of the game in the land market have been changed. In face of intense competition from mainland players and small-to-medium sized developers, major firms would be unlikely to win if their conservative bidding attitudes stay unchanged,” said Wong Tsz -choi, senior director, valuation and advisory services, at CBRE Hong Kong. Most government tenders have attracted dozens of bidders since the Leung Chun-ying administration’s move to increase land supply in 2012 to stabilise home prices. “They [big developers] have to bid aggressively or even narrow their profit margins for those sites they are keen to buy,” he said. But Knight Frank’s Lam said the recent upswing in land sale prices did not indicate a full turn around in the residential market. “The market adjustment will last for one to two years ,” he said.