SHKP won the plot at Yuen Shun Circuit in Sha Tin (Image: Google)
Despite drawing 11 bids from interested developers, a residential site in Hong Kong’s New Territories sold for less than half of 2022 rates this past week, as the city’s housing market continues to slide.
A unit of developer Sun Hung Kai Properties won a government tender for Sha Tin Town Lot No. 623, a site near the City One MTR station, 17 kilometres (10.6 miles) north of Central, with a bid of HK$619 million ($79 million), according to a statement by the city’s Lands Department late on Wednesday.
With the site approved for development of up to 156,615 square feet (14 550 square metres) of gross floor area, excluding space for a senior care centre and other public facilities mandated under the land sale conditions, Sun Hung Kai is paying the equivalent of HK$3,952 per square foot for the plot.
The tender comes just under two years after a joint venture between local player Wing Tai and Vanke Overseas Investment Holding won a tender for a nearby Sha Tin site with a bid equivalent to HK$8,802 per square foot of gross floor area, or more than double the winning bid this week.
Right Place, Right Size
The successful tender came after the Hong Kong government said earlier this month that it would offer just one housing plot for sale during the third quarter of this year, as housing prices continue to decline despite the removal of home price restrictions early this year.
SHKP chairman Raymond Kwok is buying low
Analysts attributed the success of this latest land sale to location of the 26,102 square foot site, as well as to its moderate scale making it affordable to a wide range of potential bidders.
“The site is opposite an MTR station and there is not much new supply in the Shatin area,” Alex Leung, chief surveyor at CHFT Advisory and Appraisal told Mingtiandi. “We expect there will be steady demand for new flats coming from residents of older private estates and public estates nearby.”
“In addition, the project not too small and not too big, so it fits appetites of medium to large scale developers,” Leung added.
Dorothy Chow, head of valuation and advisory services for Colliers in Hong Kong, also pointed to the project’s neighbourhood and developed infrastructure in the area as selling points.
“This residential site is a relatively mature site, in a close cluster with the private residential development nearby including Sha Tin City One, Yu Chui Court and Shuk Mun Estate, plus a fully developed infrastructure and transportation system, lowering the investment risk of developers,” Chow told Mingtiandi.
Sun Hung Kai Properties had said that it plans to develop small to medium sized flats in the Sha Tin project, with the government having estimated that the site will yield around 280 homes.
Other bids for the site came from local players Wheelock Properties, Far East Consortium, Great Eagle, Sino Land and CK Asset. Also offering tenders were mainland developers China Merchants Land, China Resources Land, China Overseas Land & Investment and CITIC Pacific.
Housing Slide Continues
While the Sha Tin sale brought developers back into the market, with Hong Kong’s housing sector having declined each year since 2021, home prices in the city are now down 23.1 percent from their peak three years ago, according to JLL, which predicts further misery.
The government’s removal of cooling measures in February failed to reverse the downward trend in the housing market, with the property consultancy predicting further price erosion.
“Prices of mass residential will drop about 10 percent in the second half of 2024, while prices of luxury residential will drop 5-10 percent due to increased new supply,” said JLL Hong Kong chairman Joseph Tsang in a statement earlier this month. “Even if the US rate is cut by 25-50 basis points, it is unlikely to have a material impact on local mortgage rates.”
JLL pointed to substantial developer inventories, high project financing costs putting pressure on builders, elevated mortgage rates and a subdued local economy, as combining to dampen homebuyer enthusiasm.
