Sun Hung Kai’s $1.4 Billion Hong Kong Land Buy Beats Estimates

June 09, 2010 - Kowloon City

Following the $233 million deal for Falconridge plot in Hongkong, Sun Hung Kai Properties Ltd., the world's biggest developer by market value, paid HK$10.9 billion ($1.4 billion) for a residential site at a public auction, beating estimates and underscoring that luxury home demand is withstanding government efforts to cool the market.

At HK$12,540 per square foot, it is the highest price paid in a government auction in urban Hong Kong since the market peaked in 1997, said Centaline Property Agency Ltd.

Lands Department deputy director and auctioneer Graham Ross said the government is "happy" about the transaction price for the Ho Man Tin site.

"At this price, the unit price would be as high as HK$15,000 to HK$16,000 per square foot," said Adrian Ngan, an analyst of CCB International Securities Ltd. "I expect the gap between luxury and mass apartments would widen after this land sale."

Home prices have risen 41 percent since the end of 2008, prompting the government to tighten down-payment requirements for luxury homes in October to curtail speculation after record- low interest rates fueled the surge.

"The above-expectations bidding price shows that the developers hold a positive outlook on urban sites for luxury homes, as currently it is obvious the supply for luxury homes is not sufficient," Wong Leung-sing, an associate director of research at Centaline, one of the city's biggest real estate agencies, said yesterday.

Luxury home prices may rise 20 percent this year as the economy expands and supply remains limited, real estate broker CB Richard Ellis Group Inc. said in January.

Luxury homes in Hong Kong are defined as those costing at least HK$10 million or bigger than 1,000 square feet (93 square meters).

Source: Businessweek - The Standard 

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