A parcel of residential land for sale in Tai Po fetched more bids than anticipated in a possible sign that Hong Kong’s developers are becoming more optimistic about the flagging market. The plot at Pak Shek Kok had received 10 bids when the tender closed at noon on Friday, beating Knight Frank’s estimate of five to eight bids. The builders that submitted bids included Sun Hung Kai Properties, CK Asset Holdings, Henderson Land Development, Wheelock Properties, K Wah International, K&K Property, Far East Consortium, KWG Property and a joint venture between China Overseas Land and Investment and Sino Land. The other bid was from a consortium comprising Asia Standard International Group, Lai Sun Development, Lifestyle International Holdings and CSI Properties. The plot, the last one to go for tender in Pak Shek Kok, is valued between HK$5.2 billion (US$663 million) and HK$6.2 billion, or HK$5,500 to HK$6,500 per square foot, according to Knight Frank. At a plot ratio of 2.68 times, the 354,136 square foot site can be developed to provide a total gross floor area of almost a million square feet, the size of about 12 football fields. Sales of used homes in Hong Kong gain momentum as owners slash prices The tender comes after a hotel site in the Kai Tak area was withdrawn from tender last week because the prices offered by the nine bidders did not meet the Lands Department’s reserve price. Housing is seen as less risky than commercial development because of an overall shortage of residential supply and the longer time generally required for a commercial development to become popular, said Tony Wan Wai-ming, general manager of sales and marketing at K Wah. “[Commercial development] is a long-term investment, so developers will take that into account when offering prices,” said Wan. “It takes three to five years to make a shopping centre popular, for example.” The total development cost of the Tai Po parcel will be from HK$8.5 billion (US$1.08 billion) to HK$9.5 billion, according to Knight Frank, but the commercial site in Kai Tak requires a total development cost of up to HK$17 billion. The high supply in new developments nearby means competition for buyers in the future will be fierce and that will dampen prices, said Thomas Lam, executive director of Knight Frank. Meanwhile, the developer is required to build a home for the elderly of at least 14,575 square feet and to provide a couple of parking spaces for minibuses and ambulances, said Alvin Lam, director of Midland Surveyors. JP Morgan goes bullish on Hong Kong home prices, expecting gains of up to 7 per cent this year The strong response comes after CLSA, Citibank and JPMorgan predicted home prices will rise by up to 15 per cent between April and December amid high market liquidity and pent-up demand from people new to Hong Kong. Their predictions followed a 9 per cent drop in Hong Kong’s home prices from July to December and pushed 262 homeowners into negative equity in the fourth quarter of last year. It was the first time in two years that some property values had dropped below outstanding mortgage loans, the Hong Kong Monetary Authority said last week.