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House on The Peak in Hong Kong fetches record price

HONG KONG: A listed electronic components manufacturer on March 16 bought a house on The Peak for HK$60,215 (RM25,597) per sq ft, making it the most expensive home in Hong Kong in terms of price per sq ft.

Sino-Tech International Holdings said they had agreed to buy house No 8 at Sun Hung Kai Properties' Severn 8 in Severn Road on The Peak for HK$280 million for investment purposes. The 3-storey house has a gross area of 4,650 sq ft and offers Victoria Harbour views.

The price exceeded the previous record set by house No 2 in the same development, which sold for HK$56,200 per sq ft in 2007. But the purchase comes at a difficult time for Sino-Tech. The firm issued a profit warning last Friday (March 12), saying it expects to record a loss for the 2009 financial year, compared with a profit in the previous year.

It is the first major property acquisition for the company. It said in the announcement that the acquisition is a good investment opportunity and it will benefit from diversifying into the property market.

However, investors in the stock market did not share the view. Shares in Sino-Tech dropped 9.38% to close at 58 HK cents after it announced the acquisition.

"It is questionable whether the buyer can generate a profit. There is a risk in the prospects of the property market," said Koh Keng-shing, managing director at Landscope Surveyors, a luxury property agency.

Prices of high-end residential properties in prime locations surged 50% last year, with values rising 10% in the first two months of this year. "If the government does not release new measures to cool the property market and the economy continues to improve, prices of luxury properties will rise a further 10% by the end of the year," he said.

However, the luxury residential sector would be hit if the stock market dropped sharply or interest rates rose quickly.

With the growth in housing rentals lagging behind price growth, property agents expect the 3-storey house to be leased for about HK$370,000 a month or HK$80 per sq ft. Sino-Tech could enjoy a rental yield of 1.6% if the property is leased.

To realise a profit, the company will have to look for another buyer who is willing to pay a record unit price of more than HK$60,215 per sq ft.

Severn 8 comprises 22 houses ranging in floor area from 3,300 to 5,147 sq ft and it has consistently been the most expensive project in the city since it was launched in 2007.

The luxury residential market was active last month, despite a rise in stamp duty on high-end properties.

Centaline Property Agency's research shows 106 houses worth HK$1.3 billion were sold last month. The transaction number was 12.8% higher than that of January. – South China Morning Post

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