Henderson to Sell Flats at Hong Kong Project Under Probe
The 39 Conduit Road residential building, Hong Kong
Jerome Favre/Bloomberg
The 39 Conduit Road residential building stands in the Mid-Levels district of Hong Kong, China.
The 39 Conduit Road residential building stands in the Mid-Levels district of Hong Kong, China. Photographer: Jerome Favre/Bloomberg
July 30 (Bloomberg) -- Donald Choi, managing director at Nan Fung Development Ltd., a privately-held developer, talks with Bloomberg's Phillip Yin about the outlook for Hong Kong's real estate market. A private owner has put a building site in the Peak district, one of Hong Kong’s most exclusive residential areas, up for public tender, according to property broker Jones Lang LaSalle Inc. Nan Fung and Wharf (Holdings) Ltd. on July 28 bid HK$10.4 billion for a site on Mt. Nicholson Road in the Peak area, falling short of some surveyors’ estimates. (Source: Bloomberg)
Lee Shau-kee, chairman of Henderson Land Development Co.
Timothy O'Rourke/Bloomberg
Lee Shau-kee, chairman of Henderson Land Development Co.
Lee Shau-kee, chairman of Henderson Land Development Co. Photographer: Timothy O'Rourke/Bloomberg
Hong Kong billionaire Lee Shau-kee’s Henderson Land Development Co. plans to sell 10 new apartments at the luxury development where the cancellation of sales worth HK$2.67 billion ($342 million) sparked an investigation by authorities.
The builder held a briefing with real estate agents yesterday to start marketing the 10 units at 39 Conduit Road, spokeswoman Bonnie Ngan said in a phone interview today. The units were not part of the 20 collapsed sales, she said.
“It shows that the developer is quite optimistic about where the luxury property market is heading,” said Patrick Chow, head of research at Ricacorp Properties Ltd., a local real estate brokerage. “I don’t think they would’ve put it out to the market if they don’t have lots of confidence they’ll be able to sell them at these prices. It would look very bad for them if they have to lower prices or even withdraw them.”
Hong Kong’s fifth-biggest builder by market value is under government and police investigation after it said in June that 20 of 24 luxury flats it had expected to sell at the development had been canceled. The company has denied any wrongdoing, and police and government officials have declined to comment on their probes.
The developer is aiming to sell the 10 flats that are priced at as much as about HK$186 million as home prices in the city are expected to increase with interest rates at two-decade lows and demand for the city’s high-end properties from mainland buyers. The value of Hong Kong luxury homes may climb 10 percent in the second half on record-low mortgage rates and strong economic growth, according to Jones Lang LaSalle Inc.
Surging Prices
Henderson’s shares dropped 1 percent to HK$50.05 at the 4 p.m. close of trading in Hong Kong. The stock is down 14 percent this year. The seven-member Hang Seng Property Index, which includes Henderson, fell 1.3 percent in 2010.
The city’s overall property prices surged more than 40 percent since the beginning of last year, according to the Centa-City Leading Index, a weekly measure developed by Centaline Property Agency Ltd. and City University of Hong Kong.
Hong Kong’s Commercial Crime Bureau took documents from Henderson’s offices a month ago as part of the investigation.
Henderson said it will take a charge of HK$734 million against earnings from the canceled sales. The builder said in October one of the flats was selling for as much as a record HK$88,000 a square foot.
The 10 new apartments range in size from 2,808 square feet (261 square meters) to 3,533 square feet, according to a price list on the development’s website. The cheapest is listed at HK$81 million and the most expensive at HK$186 million.
Lee, Hong Kong’s second-richest man, on June 15 told reporters “we won’t be cutting prices,” when Henderson announced the 20 sales were scrapped. “Maybe we’ll make more money when we sell these apartments again,” he said at the time.
Property Curbs
Hong Kong’s government is attempting to curb the surge in home prices amid concern housing is becoming unaffordable. It has raised stamp duties on some luxury home transactions and increased land supply.
Developers will be required to disclose details of canceled sales of new homes within five working days, and give the estimated date when new homes will be completed, to improve transparency of property transactions, the government said in a statement Aug. 10. The new rules will be effective from Aug. 12.
Luxury homes in the city are defined as those costing at least HK$10 million, or bigger than 1,000 square feet.
To contact the reporters on this story: Kelvin Wong in Hong Kong at kwong40@bloomberg.net
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