Cheung Kong (Holdings) Limited, HKG:0001 has spent more than HK$22 billion snapping up six sites in public land sales this year even as government measures to curb a more than 70 percent surge in home prices since early 2009 take effect. Two sites in August sold below analyst estimates, home price gains have stalled on concern the economy is sliding into recession while transactions fell for eight straight months.
Cheung Kong (Holdings) Ltd., which sold the most homes in Hong Kong in the first half, may lead developers’ bids at a government land auction as it seeks to replenish reserves after a pullback in home prices.
The company, controlled by billionaire Li Ka-shing, the city’s richest man, and rivals including Sun Hung Kai Properties Limited, HKG:0016 may pay HK$3.7 billion ($475 million) tomorrow for the site in the Tseung Kwan O district with a buildable area of 793,000 square feet, according to the median estimate of five surveyors and analysts.
Some analysts are cutting their estimates for three land sites set to be auctioned tomorrow, due to building restrictions and an uncertain world economy.
The three plots – at Tseung Kwan O, Yuen Long and Sai Kung – are now expected to fetch HK$3.8 billion to HK$4.8 billion in all, down from an earlier minimum of HK$4.26 billion.
“Amid the economic uncertainties, it won’t be a surprise if developers prefer to hold on to capital to invest in higher- end plots, rather than in not-as-good plots like the ones going under the hammer this time,” Cushman & Wakefield director Vincent Cheung Kiu-cho said.
Cheung lowered his forecast on the 144,238-square-foot Tseung Kwan O plot by 12 percent to HK$3.48 billion, or HK$4,384 per buildable sq ft.
“Given the restrictions, future buildings on the site will only have a maximum of 25 floors – a lot lower than neighboring buildings,” he said, adding that flats will likely sell for around HK$7,500 per sq ft.
The Tseung Kwan O Area 66A site has a total gross floor area of 792,898 sq ft, where at least 960 to 1,010 flats must be built.
Centaline Surveyors director James Cheung King-tat also lowered his forecast on this plot by more than 9 percent, blaming building restrictions and weak developer sentiment amid increasing uncertainties in the global economy.
Centaline agents said owners of neighboring flats are asking HK$5,993 psf – up 3.6 percent from January.
Cheung also reduced his estimate on the 120,471-sq-ft plot at Tan Kwai Tsuen Road, Yuen Long, by 12.7 percent to HK$480 million – or HK$4,000 per buildable sq ft – from HK$550 million, or HK$4,565 per buildable sq ft.
Other surveyors expect it to go for HK$230 million to HK$506 million, or HK$1,909 to HK$4,200 per buildable sq ft. At least 170 flats must be built on the site with a 120,471-sq-ft gross floor area.
Estimates remain unchanged for the 25,834-sq-ft Sai Kung plot at the junction of Pak Shek Wo San Tsuen and Clearwater Bay roads. It is tipped to fetch between HK$91 million and HK$183 million, or HK$7,516 to HK$15,115 per buildable sq ft.