A tract of land at Kowloon Tong’s Beacon Hill could fetch a record HK$7.5 billion at auction, in what could be the Hong Kong government’s most expensive land sale this year.
The site, measuring 235,182 square feet in the tony neighbourhood of Lung Cheung Road, received 11 bids, according to a Lands Department spokesman.
The upbeat interest follows a 2 per cent rise in Hong Kong’s August price index for private homes to 287.4, the fifth consecutive month of advances, bringing the total gains over the period to 5.9 per cent.
“The recent home buying frenzy and rebound in apartment prices will encourage developers to bid aggressively for the Beacon Hill site,” said James Cheung, a director at Centaline Surveyors. “The plot will likely set a new benchmark in the area.”
Home prices are now a mere 6.1 per cent away from their September 2015 peak, according to government data. Meanwhile, the July rental index rose 0.8 per cent, compared with June.
That’s bolstering the confidence of developers in the housing market.
Wheelock Properties and Regal Hotels International have also made individual bids for Beacon Hill.
Another coalition formed by Shimao Property Holding and Shenzhen-based Logan Property Holding also submitted a bid. Logan in June won a residential site in Shenzhen with its partner for a record 14 billion yuan. The other three bidders are unknown.
The Beacon Hill site is next to a plot sold to Kerry in February for HK$2.38 billion, or HK$21,000 per square foot, a record for the area.
Centaline has raised its estimate of the site by 10 per cent to HK$7.54 billion, or HK$22,000 per square foot, from an original estimate of HK$6.85 billion.
The updated projection is above the forecasts released by other analysts, which range from HK$6.2 billion to HK$7.5 billion, or HK$18,000 to HK$20,000 per square foot.
Thomas Lam, head of valuation and consultancy at Knight Frank, said the winning bidder will need to invest a total of HK$10 billion, including land costs, to develop the site.
Taking into account construction costs and interest expenses, he predicts apartments in the area to start at around HK$35,000 per square foot.
Hong Kong’s housing market has been picking up since the second quarter, as eager home seekers returned to the market.
As of Thursday, the total number of transactions in September, including first-hand and second-hand homes, together with commercial properties, reached 8,234 deals, according to data from property agent Midland Realty.
The turnover was 11.5 per cent higher than the monthly transactions of 7,430 deals recorded for the full month of August.
Buying activity was bolstered by aggressive mortgage plans offered by non-banking finance companies.
Finance firms Convoy Global Holdings and ETC Finance recently unveiled aggressive mortgage options designed to attract new borrowers ahead of a possible interest rate increase in December. These options include loans of up to 90 per cent of the value of flats priced between HK$8 million to HK$12 million, exceeding the financing provided by local banks which are capped at 60 per cent of the value of homes between HK$6 million and HK$10 million.
Cheung Kong Property is to offer an unprecedented payment scheme to boost the sale of its luxury residential project in Ma Tau Kok, giving buyers 12 years to complete the transaction.
To boost sales for its new project The Zumurud, starting at HK$33.23 million each, the developer said buyers just need to put down 20 per cent of the value of their apartments as deposit.