Cemeteries bury land auction
Thursday, September 30, 2010
A government land auction was spooked yesterday - for the first time in 16 years a site had to be withdrawn. The urban plot in Chai Wan faces six cemeteries and not a single developer was interested.
But a site in Fan Ling attracted 43 bids and was sold to Sun Hung Kai Properties (0016) for a better- than-expected HK$459 million.
Its accommodation value of more than HK$3,000 per square foot is a record for North District.
Eight surveyors had expected the 19,418-square-foot plot in Lin Shing Road, Cha Wan, to fetch HK$620 million to HK$930 million. But developers ignored it despite an opening bid of HK$530 million.
Lands Department deputy director and auctioneer Graham Ross said the withdrawal was "an unusual and a rare occurrence." It last happened in 1994 when a Yuen Long industrial site was withdrawn.
Developers appeared concerned about the cost to maintain and stabilize a large slope nearby. It was natural for the site to be withdrawn because of development risks and undefined maintenance costs, said Stewart Leung Chi-kin, New World Development (0017) executive director and vice chairman of the Real Estate Developers Association.
"When I sell the units, it's unfair for buyers to bear all risks." Leung said. "If I'm to bear the risks, it's not worthwhile to make such a big investment."
Ringo Lam Chun-chiu, valuations director at AG Wilkinson & Associates, said the slope could drive construction costs up by 20 percent. He said it would be difficult to build units that will not have cemetery views.
Shares of top developers closed higher despite the auction hiccup.
SHKP needed just 25 minutes to secure the 27,556-sq-ft plot in Luen Wo Hui, Fan Ling, beating five other firms. Knight Frank expects homes on the site to sell for as much as HK$6,000 psf. This compares with HK$2,659 to HK$3,328 psf at eight nearby developments. Centaline Property expects prospective sellers in the neighborhood to raise asking prices by 5 to 10 percent.