Nan Fung Development and The Wharf (Holdings) paid HK$10.4 billion (RM4.27 billion) in an auction for the site at 103 Mount Nicholson Road — HK$32,014 per square foot.
They outbid New World Development, Sino Land and another, unidentified, developer.
Analysts had expected it to sell for between HK$8.7 billion and HK$11.4 billion. The 2.33-hectare site contains government staff quarters that have been empty for years.
Nan Fung and New World Development were the only two developers to submit aggressive bids. Sun Hung Kai Properties and Sino Land appeared to take a back seat, even though they have released new luxury projects that have sold well in recent months.
New World made the first bid when government auctioneer Graham Ross announced an opening price of HK$8 billion. An unidentified developer and Nan Fung submitted higher offers after Ross warned the site might be withdrawn if the offers failed to meet the government's reserve price.
He cut the incremental bid from HK$100 million to HK$50 million when the reserve price of HK$8.2 billion was reached.
The unidentified developer withdrew from bidding at HK$8.35 billion. Sino Land chairman Robert Ng Chee Siong, Chinese Estates Holdings director Lau Ming-wai and Manhattan Realty general manager Patrick Chow sat together, implying they had formed a consortium.
Sino Land made an offer of HK$8.5 billion, but withdrew when the price reached HK$8.95 billion. That left Nan Fung and New World in the running. The site went to Nan Fung with the 47th bid.
Though the site is on The Peak, according to the zoning plan it is closer to Evergreen Villa in Stubbs Road, Mid-Levels. Nicholas Brooke, chairman of Professional Property Services, said: "It is a very good site but it isn't The Peak in many people's minds. There is a challenge with development. Half of the site is slope, and the developer will have to pay extra foundation costs."
He believed some developers were cautious about bidding because they expected the government to put more luxury sites on the market in the next 12 to 18 months.
Brooke expected luxury residential prices to rise a further 10% to 15% by the end of the year.
About 30% of the floor area of the project will accommodate houses, while the rest will be used for flats. The managing director of Savills Valuation and Professional Services, Charles Chan, said the average price of the houses would have to reach HK$55,000 to HK$60,000 per sq ft for the developer to make a reasonable profit, and the flats would have to go for HK$35,000 per sq ft.
Including Wednesday's sale, the government has generated HK$26.05 billion from land sales since the start of the financial year in April. Its target is HK$34.1 billion. The government will sell four commercial and residential sites worth more than HK$7 billion next month.
The Mount Nicholson Road site could provide a gross floor area of 324,861 sq ft. Under government restrictions, the maximum building height for the northern portion is 12 storeys above one basement. For the southern portion it is 13 storeys. — South China Morning Post
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