ADVERTISEMENT

Hong Kong Land Parcel Goes for Cheaper Than Expected to CK Asset

Hong Kong Land Parcel Goes for Cheaper Than Expected to CK Asset

(Bloomberg) -- Hong Kong’s government sold a large residential plot at a cheaper price than analysts expected as developers turn cautious amid a worsening economy.

The Kowloon plot, about four times the size of a football field, went to a unit of CK Asset Holdings Ltd. for HK$4.95 billion ($639 million), 10% less than even the lowest of analyst valuations.

Last week, the government failed to sell another large site in Kai Tak because bids didn’t meet its reserve. Although property prices in Hong Kong, the world’s most expensive city for real estate, have held up relatively well this year, declining just 1.2% since January, optimism is being eroded as pro-democracy protests start back up and the economy struggles to recover from the coronavirus outbreak.

Hong Kong’s economy had its worst slump on record in the first quarter, with key industries including tourism and retail bearing the brunt. The city’s unemployment rate rose to the highest in a decade in April, posing risks to the property market as people lose their ability to repay mortgages.

The site that sold Tuesday evening was valued at between HK$5.5 billion and HK$6.5 billion by Knight Frank LLP ahead of the tender. The property-services firm had already lowered that valuation by 20% from June last year.

It also came with stringent requirements. As part of its development, at least 1,000 apartments will have to be built and sold to Hong Kong permanent residents at a 20% discount to market rates as part of the government’s program to promote home ownership.

Other developers submitting bids included Wheelock Properties Ltd., Sino Land Co. and China Overseas Land & Investment Ltd.

©2020 Bloomberg L.P.