HONG KONG: Sun Hung Kai Properties won the bidding for a government-auctioned residential site in Hong Kong for HK$3.37 billion (RM1.47 billion), well ahead of consensus, in a sign the city's housing market is showing no signs of slowing down.
Property prices in Hong Kong surged by nearly 30% last year, and by even more in the luxury sector where they now top peaks reached in 1997 before the Asia financial crisis.
Encouraged by the auction results, investors bid up shares in Sun Hung Kai, the city's largest property developer, to an intra-day high of HK$102.70 before the stock closed at HK$102.3, up 2.2% in line with the broader market.
A spokeswoman for Sun Hung Kai said the company won the land auction after it reported strong apartment sales over the weekend.
Rapidly rising land and housing prices have triggered concerns Hong Kong may join other Asian countries to introduce further measures to prevent the forming of an asset bubble.
The government may announce a raising of its stamp duty on luxury home transactions during the financial secretary's budget speech on Feb 24, local media have reported.
Adrian Ngan, an analyst at CCBI said the Tseung Kwan O site, in the city's northeastern New Territories area, sold at a reasonable price though at the high end of market expectations.
The price tag for the residential site with a gross floor area of 67,680 sq m was two-thirds above the government's initial asking price of HK$2 billion and 20% higher than an average forecast of HK$2.8 billion from six analysts polled by Reuters.
"For the whole broad market, Tseung Kwan O supplies about 80% to 90% of the inventory at the moment," said Alfred Chan, chief dealer at Cheer Pearl Investments.
"It's a good sign for the market. As far as Hong Kong goes, it looks firm and steady."
Beijing has also tightened monetary policies to help curb rising property prices and Singapore has recently introduced measures, such as a new stamp duty and capping the maximum housing loan, to cool housing prices.
However property analysts say Hong Kong property prices could rise 10% to 20% this year.
"Affordability is still good at the mass property market and there is no bubble at medium to low price housing," said Ngan.
A luxury apartment in an upmarket area of Hong Kong island sold last year for HK$71,280 per sq ft -- surpassing London prices to set a world record per sq ft.
In the last few days, Sun Hung Kai sold 900 flats for about HK$4.2 billion at its Yoho Midtown development, in Yuen Long, in the city's northern New Territories, a number that analysts said reflects healthy appetite for real estate in Hong Kong.
Hong Kong's property stocks closed on Feb 22 up 2.2% in their biggest gain in two weeks but underperformed the Hang Seng index's 2.4% rise. Cheung Kong Holdings rose 2.6%.
The Hong Kong Monetary Authority, the central bank, last year reduced the maximum mortgage for luxury properties to 60% from 70% of the price aimed at cooling the market.The HKMA has warned of the possible formation of an asset bubble and said low mortgage rates in Hong Kong were not sustainable. -- Reuters
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