Discount on Hong Kong Land Points to Worsening Housing Market
(Bloomberg) -- One of Hong Kong’s biggest sales of residential land this year added to the picture of a worsening home market.
China Overseas Land & Investment Ltd. won the site in Kai Tak on Thursday with a bid of HK$13,523 ($1,726) per square foot of floor area. That’s 13 percent less than Goldin Group paid last month for a nearby parcel.
“The number of bids drawn this time was small, and that has to do with the current market situation,” said James Cheung, a senior associate director at Centaline Surveyors Ltd. Homes on the site will lack good views, another factor capping the price, he said.
Hong Kong’s home prices are sliding and land sales have had a rough year after a record-breaking 2017. Goldman Sachs Group Inc. forecasts a 15 to 20 percent decline in property prices over two years as interest rates in the city rise in tandem with the U.S.
The Kai Tak site can yield 590,000 square feet of floor area, making it the second-biggest residential land sale by area this year. China Overseas Land is paying HK$8 billion.
The value of land parcels sold by the government in 2018 stands at HK$80 billion, down by 37 percent from last year, according to data compiled by Bloomberg. In October, the government failed to sell a residential site on the Peak.
So far, home prices have dropped 7 percent from an August high.
©2018 Bloomberg L.P.