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Hong Kong Sells Luxury Site for More Than Analyst Estimates

The Next Chief Executive of Hong Kong, Leung Chun-ying
Leung Chun-ying, will take over the office of chief executive of Hong Kong, in July. Photographer: Jerome Favre/Bloomberg

Hong Kong’s government sold a housing site in the Island South district for more than analysts estimated, easing concerns that the city’s home prices may fall on increased housing supply and the threat of a global slowdown.

Cheerwide Investment Ltd. paid HK$6 billion ($773 million) for the 248,000 square-foot site on Deep Water Bay Drive, the government said in a statement yesterday. The buyer is a unit of closely held Nan Fung Development Ltd., according to a report on the Hong Kong Economic Journal’s website that cites unidentified people. The land was expected to fetch HK$5.4 billion, according to the median estimate of three surveyors interviewed by Bloomberg News.

China’s gross domestic product expanded 8.1 percent in the first three months from a year earlier, the fifth straight quarterly deceleration, as Premier Wen Jiabao cracked down on property speculation and exports were hurt by Europe’s debt crisis. The Hang Seng Index has fallen 11 percent this month on concerns the crisis in Europe may exacerbate China’s slowdown.

“The price is reasonable,” said Ringo Lam, a director in the valuation department of AG Wilkinson & Associates. “That probably reflects that, after all, developers and homebuyers aren’t that skeptical about the market.”

Leung Chun-ying, who in July will take over as Hong Kong’s new leader, has vowed to increase housing supply to quell public discontent over a widening wealth gap in the world’s most expensive place to buy a home. Hong Kong’s home prices have gained more than 78 percent since early 2009 on record low mortgage rates and an under-supply of new units.

Developers Drop

The Hang Seng Property Index, which tracks the shares of the city’s seven-biggest developers, declined 1.5 percent as of 9:48 a.m. local time. It has climbed 0.6 percent this year.

Mainland Chinese buyers made up 36.8 percent of all new home sales by value in the first quarter, down from 37.9 percent in the previous three months, according to figures compiled by Midland Holdings Ltd. The number reached 53.9 percent in the third quarter last year, Midland said.

Donald Choi, managing director at Nan Fung, didn’t return calls from Bloomberg News seeking comment.

The government earlier this month sold a site on Repulse Bay Road in Island South for HK$1.67 billion, compared with surveyors’ estimate of HK$1.68 billion.

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