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Hong Kong Sells Tuen Mun Home Site at Price Below Estimate

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Feb. 10 (Bloomberg) -- Hong Kong sold a residential site in the city’s northwest at a price lower than surveyors’ estimates, underscoring concerns home prices may drop further amid the government’s pledge to maintain property curbs.

The HK$2.74 billion ($353 million) paid by Kerry Properties Ltd. for the Tuen Mun site, with a gross floor area of 940,000 square feet, was 19 percent lower than the HK$3.38 billion median estimate of three surveyors Bloomberg News contacted. The government on Jan. 12 withdrew the tender for a property project at a subway station in the northern Tsuen Wan district.

Home prices have fallen 6 percent since June and the government last month recorded the second-lowest number of home transactions since it began collecting the figures in 1996, because of rising borrowing costs, extra transaction taxes and higher down-payment requirements. The government is “determined” to increase land supply and will continue with measures to maintain stable home prices, Financial Secretary John Tsang said in his Feb. 1 annual budget, two days before the tender for the Tuen Mun site closed.

“There’ve been some changes in the market since the estimates were done,” said James Cheung, a surveyor at Centaline Property Agency Ltd., the city’s biggest closely held realtor. “Developers have turned even more conservative and the price reflects that.”

Kerry Properties shares rose as much as 3.5 percent before closing 1.2 percent lower at HK$32.40. The Hang Seng Property Index, which tracks the city’s seven-biggest developers, fell 0.7 percent.

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The site drew a total of seven tenders, the government said in a statement yesterday. At least 1,100 housing units are required to be built on the site, it said.

Kerry, controlled by the family of Malaysia’s richest man, Robert Kuok, will designate the Tuen Mun site for the development of a “premium residential project,” it said in an e-mailed statement yesterday.

Home prices have surged more than 70 percent since early 2009 on record low mortgage rates, a lack of new supply and an influx of buyers from other parts of China. The government has imposed measures to prevent the formation of an asset bubble since late 2010.

It will make available at least 47 residential sites for auction and tender in the next fiscal year, Tsang said in his budget speech. The sites will provide about 13,500 homes, he said.

The Hang Seng Property Index, which tracks the city’s seven-biggest developers including Sun Hung Kai Properties Ltd. and billionaire Li Ka-shing’s Cheung Kong Holdings Ltd., fell 24 percent in 2011, after gaining more than 75 percent over the previous two years. The gauge has climbed 16 percent since the start of the year.

To contact the reporters on this story: Kelvin Wong in Hong Kong at; Marco Lui in Hong Kong at

To contact the editor responsible for this story: Andreea Papuc at

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