Bloomberg News recently reported a significant government land sale that Hong Kong real estate professionals are taking as a sign of possible cooling in the region’s overheated property market. The plot in the Island South district fetched HK$1.67 billion when experts estimated a price tag of HK1.68 billion. The sale was an effort made by Hong Kong’s new leader to stand by his commitment to open up more living options across the region, and help alleviate market stressors caused by the 70% rise in home costs since 2009. For more on this continue reading the following article from Property Wire.
The property market in Hong Kong may be cooling as the government sold land in one of the city’s most exclusive areas last week for less than analysts estimated.
The winning bid for the site near Repulse Bay Road, in the Island South district, was HK$1.67 billion but the site, with a total buildable area of 42,000 square feet, was expected to fetch HK$1.68 billion, according to the median estimate of five analysts surveyed by Bloomberg News.
Leung Chun-ying, who in July will take over as Hong Kong’s new leader, has vowed to increase housing supply to quell public discontent over a widening wealth gap in the world’s most expensive place to buy a home.
Hong Kong’s home prices have increased by more than 78% since early 2009 due to record low mortgage rates and an under supply of new units.
Repulse Bay is home to some of the city’s richest people including billionaire Cheng Yu-tung of Chow Tai Fook Jewellery Group and gambling tycoon Stanley Ho.
The area has developed around the site of the former Repulse Bay Hotel, built in 1920 and demolished in 1982, and featured in the 1955 Hollywood romantic drama Love Is a Many Splendored Thing, with William Holden, and Coming Home, the 1978 film starring Jane Fonda and Jon Voight. Ernest Hemingway stayed at the hotel in the 1940s before going to cover the war in China. Marlon Brando was a guest in the 1950s.
The developer of the Repulse Bay site will probably build low rise apartments on the site, according to AG Wilkinson. Prices for the units may go for about HK$44,000 a square foot in two to three years. New units in the area currently sell for about HK$35,000 to HK$40,000, he said.
Hong Kong’s luxury home prices fell 2.2% in the first quarter of 2012 from three months earlier to HK$18,730, as mortgage restrictions imposed by the government on properties over HK$10 million reduced demand for those units, according to a report by Colliers International.
Savills said Hong Kong is the world’s costliest place to buy an apartment, with prices about 55% higher than London.
Hong Kong’s new home sales jumped more than twofold in March from a month earlier, reaching a 14 month high, according to the Land Registry.
To avoid the formation of an asset bubble, the government has imposed curbs since 2010 including additional taxes on home transactions and higher minimum mortgage down payments. At least a third of Hong Kong’s luxury home buyers in 2011 were from mainland China, according to Centaline.
This article was republished with permission from Property Wire.