HK to auction first home site in a year

Source : Business Times – 5 May 2009

But small size may not draw interest from bigger builders
Hong Kong’s government will auction a residential building site for the first time in almost a year today, in a test of developers’ expectations in Asia’s second-most expensive luxury housing market.

The site, of 306 square metres (3,300 square feet) in Sheung Shui in northern Hong Kong, may be too small to draw interest from bigger builders, said Buggle Lau, chief analyst at Midland Holdings Ltd, the city’s biggest publicly-traded property agency.

‘Developers are eager to replenish their land bank, but this site is pretty small,’ Mr Lau said yesterday, declining to identify which builders may be interested. Midland expects the land to sell for HK$39 million (S$7.4 million).

Prices of existing homes in Hong Kong rose 10.7 per cent between December 28 and April 26, according to figures from Centaline Property Agency Ltd, amid optimism that the world’s biggest economies are recovering from a recent slump on stimulus spending.

Hong Kong has the second-highest luxury home prices in Asia, with an average price of US$16,125 a square metre, after Tokyo with an average of US$17,998, according to the Global Property Guide website.

The government, one of Hong Kong’s biggest suppliers of unoccupied land, sells land under a system where developers trigger auctions from a list of available sites by promising to pay a minimum amount.

Today’s auction is the first of the fiscal year that started April 1 and the government’s first public sale of a building site for housing use since May 9, 2008, according to the Lands Department.

The winning bidder can build 1,407 square metres of floor space on the site, with a height limit of 20 metres, according to Midland.

Government land sales and premium revenue was likely HK$16.9 billion in the year through March 31, 2009, 73 per cent less than the previous 12 months, according to figures in the budget, released on Feb 25.

Income for the year through March 31, 2010, may be HK$16.5 billion, according to the budget.