Sunday, November 29, 2015   

Low-end $4b win


Wednesday, May 09, 2007

Hong Kong's first land sale this fiscal year has raised HK$4 billion - the low end of market estimates - in a sign that developers could be holding on to their financial resources to bid in next month's auction for a prime site in West Kowloon.

Tuesday's auction saw a consortium comprising Sino Land (0083), Chinese Estates Holdings (0127), K Wah International (0173) and Nan Fung Development outbid five rivals to win an 86,758-square-foot residential plot at the West Kowloon reclamation area for HK$6,147 per square foot.

The sale price was 53.6 percent higher than the reserve price of HK$2.605 billion, or HK$4,003 psf.

Analysts expected the site, bounded by Hoi Wang Road, Yan Cheung Road and Yau Cheung Road near Yau Ma Tei, to fetch between HK$4 billion and HK$5 billion.

The site drew cautious bids from New World Development (0017), Wheelock Properties (0049), Cheung Kong (Holdings) (0001) and two unidentified companies.

Vigers Appraisal and Consulting executive director Tony Chan Tung- ngok said the large sums involved and the slow sales of flats in the West Kowloon district may have dampened bidding. He added the HK$50 million asking price per bid may have put off bidders. "There were one to two instances when it was almost dead air," he said.

Charles Chan Chiu-kwok, managing director of valuation and professional services at property consultant Savills, said the government should have lowered the asking price at each bid to help stimulate bidding sen

Midland Surveyors director Alvin Lam Tsz-pun said the consortium also reduced the number of bidders. "When companies partner up, fewer bidders will take part, which will affect the number of bids."

Alex Lui Yiu-wah, managing director at K Wah subsidiary K Wah Real Estates, said the consortium would build luxury apartments for an estimated total investment of HK$6 billion.

Nan Fung director Donald Choi Wun-hing said Sino will own a 45 percent stake in the project, with privately held Nan Fung taking 25 percent and Chinese Estates and K Wah each holding 15 percent. Choi described the final price as "reasonable."

Wheelock, which triggered the site for sale, did not express disappointment after failing to secure the site. The company is set to take part in next month's auction of a 122,204 sqft waterfront site, also in West Kowloon.

"It cannot be ruled out that some developers want to reserve their resources in order to bid for the other West Kowloon site due for auction next month," Vigers' Chan said.

"The sea view of the Hoi Fai Road site in next month's auction is a little better than this one."

Midland's Lam agreed developers may have wanted to keep the price down so as not to set too high a benchmark for the Hoi Fai site.

In light of the auction results, property stocks continued to decline on profit-taking with the big four developers seeing heavy selling.

New World Development dipped 3.6 percent to close at HK$19.38 Tuesday, while Henderson Land Development (0012) fell 2.8 percent to HK$53.80.

Cheung Kong fell 1.3 percent to HK$106 and Sun Hung Kai Properties (0016) slipped 1.6 percent to HK$94.85.

Sino Land fell 0.7 percent to close at HK$17.78.

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