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Hong Kong May Sell Kowloon Site for Record Price Even After Property Curbs

Kelvin Wong Bloomberg.com 08/31/2010 05:48
Hong Kong May Sell Kowloon Site for Record Price Even After Property Curbs - Hong Kong - Business - Real Estate - Kowloon

Hong Kong developers may pay a record per-square-foot price for government land on the Kowloon Peninsula in an auction today even after new measures to cool home prices, some analysts said.

The site on Ede Road in the Kowloon Tong district may fetch HK$1.02 billion ($131 million), or HK$13,167 per buildable square foot, according to the median of a five analyst estimates in a Bloomberg News survey. The previous record was set in June, when Sun Hung Kai Properties Ltd. paid HK$12,540 a square foot for a site in the nearby Ho Man Tin district.

The government on Aug. 13 raised down-payment ratios and said it will increase land supply amid concerns housing is becoming unaffordable. Four days after the announcement, Cheung Kong (Holdings) Ltd., controlled by Hong Kong’s richest man, Li Ka-shing, paid more than estimated for two building sites in a government auction, one of them also in Ho Man Tin.

“The site is at a good location in a traditional luxury residential area,” said Ringo Lam, director in the valuation department of surveying firm AG Wilkinson & Associates, who forecast the site to be sold for HK$1.1 billion. “Also, the relatively small amount of capital needed to invest means more developers can afford to compete for it.”

The value of today’s site may be further bolstered by two adjacent plots that the government may sell in the future, as they can be jointly developed into a large-scale residential complex with a higher profit margin, said Lam.