Hong Kong land sale beats estimates, increasing hope

Bloomberg

Centaline Property Agency and rival agency Midland Holdings had estimated the 306 square-meter (3,300 square-foot) site in Sheung Shui in northern Hong Kong would sell for HK$39 million. The land was sold to Successful Properties, according to the Land Department.

Hong Kong home transactions rose to the highest level in 10 months in April, signaling the city’s real estate market is recovering from a recent slump. The Hang Seng Property Index, which tracks the city’s six biggest developers, has risen about 28 percent this year, making it the best-performing component in the benchmark.

"There were 11 bidders and that shows the market has confidence," said Alvin Lam, a director at Midland Surveyors, part of Midland Holdings. "The sale exceeded most estimates by 20 percent and this is a positive sign for market sentiment."

Hong Kong has the second-highest luxury home prices in Asia, with an average price of $16,125 per square meter, after Tokyo with an average of $17,998, according to the Global Property Guide Web site.

The number of residential units changing hands rose to 9,856 in April from 7,102 in March, the Land Registry said yesterday on its Web site. The amount for these transactions climbed to HK$31.6 billion from HK$25.5 billion.

The government, one of Hong Kong’s biggest suppliers of unoccupied land, sells land under a system where developers trigger auctions from a list of available sites by promising to pay a minimum amount. Yesterday’s auction is the first of the fiscal year that started April 1 and the government’s first public sale of a building site at least partially designated for housing since May 9, 2008, according to the Lands Department.

The winning bidder can build 1,407 square meters of floor space on the site, which has a height limit of 20 meters (66 feet), Midland said. Buyers may build retail shops below a few levels of apartments, Centaline’s Wong said.

"The sale indicates positive sentiment," said C. Mills, assistant director of the Lands Department, at a press briefing yesterday. "I don’t think it will have a great impact on prices in the sector though due to the size of the lot." Bigger developers will likely be more interested in the Urban Renewal Authority’s June 15 tender of an 88,500 square-foot site in Wan Chai, Wong said. An 835,000 square-foot commercial-residential building can be built on the site, the government agency said in a statement on its Web site Monday.

"This is a golden lot, as there are very few sites left near the Central district for sale," Wong said.