HK tycoon buys prime land for top dollar

Aug 18, 2010
HK tycoon buys prime land for top dollar
HONG KONG: Hong Kong's richest man, Mr Li Ka-shing, snapped up two prime residential sites yesterday for prices well above market estimates, despite government measures to cool the overheating property market.
Mr Li's Cheung Kong Holdings bought a 7,551 sq m waterfront plot in the city's Kowloon district for HK$3.51 billion (S$612 million), with around 150 bids placed in just over an hour.
The final price was nearly twice the opening bid of HK$1.77 billion, and translates into a per-square-foot price of HK$9,597, making it the most expensive land in the district.
The whopping price exceeded estimates of HK$2.3 billion to HK$2.82 billion from analysts polled by Dow Jones Newswires.
The blue-chip developer also bought another auctioned site, a 7,326 sq m plot also in Kowloon, for HK$4.1 billion.
The price was 43.5 per cent higher than the opening bid and above the top end of the market estimate of about HK$3.9 billion.
'It so happened that the two pieces of land have excellent views and our colleagues have good developments plans for then,' Cheung Kong vice-chairman Victor Li told reporters after the auction. 'I don't think the auction prices are an indication of our outlook for property prices.'
A combination of low interest rates, ample liquidity and sound economic growth has pushed Hong Kong residential property prices up by almost 15 per cent this year, after gaining a third last year.
Hong Kong Financial Secretary John Tsang said last week that prices for large flats had exceeded previous highs in 1997 and were headed towards historic peaks, prompting the government to raise stamp duty on luxury apartments earlier this year and implement more measures last week.
'The new measures will not change the imbalance of supply and demand for residential buildings. The increase in land supply in recent months is not sufficient to satisfy the large appetite for residential flats,' Mr Charles Chan, managing director for Savills Valuation and Professional Services, said.
The government said last Friday that it would increase land supply and tighten mortgage lending to avoid a property bubble.
Mr Tsang said the government would auction three more sites before March next year, regardless of whether developers tabled an offer equal to at least 80 per cent of the government's minimum price - a requirement under the city's land auction rules.
Two of the three sites will be auctioned next month, he said.
'A large amount of hot money has flown into Hong Kong's financial system,' Mr Tsang said last week.
'There is an increased risk of a property bubble forming because interest rates are expected to continue to be very low for some time to come.'
The Hong Kong Monetary Authority warned banks that the credit risks they faced in residential mortgages were rising and unveiled measures to help them cope.
These included lowering the loan-to- valuation ceiling to 60 per cent for properties worth HK$12 million or more. The ceiling for all non-owner-occupied residential mortgages would also be lowered to 60 per cent.
Following Monday's declines on the Hong Kong stock exchange, property shares rebounded in response to the better-than-expected auction results.
Sino Land jumped 3.61 per cent to HK$13.76, Cheung Kong rose 1.05 per cent to HK$100.40 and Sun Hung Kai was up 0.46 per cent at HK$110.50.