The government's plans to vastly increase land supply was dealt a body blow in an auction for a luxury site in Sha Tin on August 9, when there was only one bidder and the plot was sold at a price far below market expectations.
A consortium, involving Kerry Properties, Sino Land and the Manhattan Group, headed by Hong Kong Tourism Board chairman James Tien Pei-chun, bought a 248,175 sqft site in Kau To for HK$5.5 billion. Some market analysts had expected the site to sell for more than HK$9 billion.
The site has a buildable area of about 1 million sqft, which works out to HK$5,332 per sqft, far below market estimates of up to HK$9,000 per sqft.
The timing of the auction was unfortunate, falling in the immediate aftermath of Standard & Poor's downgrade of the United States' credit rating, when financial markets were volatile.
'As a result of the auction and recent stock market fluctuations, we believe secondhand transactions will slow down, and property prices are expected to ease by 5 per cent,' says Jeffrey Ng Chong-yip, senior executive director at Hong Kong Property.
However, other experts believe the lower than expected price was related to the fact that the site was handicapped by the conditions which the government attached to the auction.
