Sun Hung Kai Properties Ltd., Hong Kong’s second-largest developer, won two residential sites in the city for HK$4.2 billion ($542 million) as the government speeds up land sales to meet its housing target.
A Sun Hung Kai unit beat three other developers including Henderson Land Development Co. and Sino Land Co. to win a site in the northern district of Tin Shui Wai for HK$2.2 billion, according to a government statement yesterday. The other site, also in the area, was sold to a separate unit for HK$2 billion. A minimum of 2,470 residential units should be built on the two sites, according to the statement.
Hong Kong’s government is tendering more sites to ease a housing shortage that has fueled a doubling of home prices since 2009 and discontent over affordability. Price gains have moderated since Chief Executive Leung Chun-ying imposed the latest round of curbing measures in February last year, adding onto taxes to deter overseas buyers and speculators.
“The government looks to the market for reference, and home prices have, in fact, gained less, or even adjusted, so that’s why we’re seeing lower land prices,” said Alfred Lau, a Hong Kong-based analyst at Bocom International Holdings Co. “Since there isn’t as big of an upside for residential prices, developers will stay more cautious in their land bids.”
The prices paid for the Tin Shui Wai sites are equivalent to HK$1,822 and HK$1,893 per square foot based on gross floor area, and within estimates, according to Centaline Property Agency Ltd. That’s less than the estimated HK$2000 to HK$2,500 per-square-foot for a site tendered by MTR Corp., which eventually was withdrawn, according to Bocom’s Lau.