Home builders remain enthusiastic

About 10 developers bid for two residential sites at TKO, Sha Tin

About 10 developers submitted bids for two residential sites offered for sale by the government, suggesting that home builders' appetite for residential plots remains intact despite the government's latest restrictive measures on home purchases.

Local developers, including New World Development Co, Sun Hung Kai Properties Ltd and Henderson Land Development Co, have submitted tenders for the two sites located in Tseung Kwan O and Sha Tin.

The Tseung Kwan O and Sha Tin plots, which are expected to provide up to 630 units and 463 units according to government data, have received seven and nine bids, respectively, when the tender closed by noon on Friday, RTHK reported.

Although the two land plots received warm responses from the developers, Wong Leung-sing associate director of Centaline Property Agency Ltd, said the participations will not necessarily translate into higher bid prices.

"Many of these developers may have only submitted some rather low prices in the tenders to give a shot," Wong told China Daily in a telephone interview.

RTHK also cited anonymous developers in the city saying that the tender prices offered this time has been stymied by the newly announced government measures last Friday. The measures include the imposition of a 5-percent rise in punitive stamp duties - ranging from 10 to 20 percent on short term home resales within a three-year period, and an additional unprecedented 15 percent Buyers' Stamp Duty (BSD) on home purchases by companies and non-Hong Kong permanent residents.

Chow Mun-kit, head of research department of the Ricacorp, said as these new measures will block out some investors, the market is worried that there will be follow-up measures making developers less active in tendering for land at higher prices.

Taking into account of the effects of the government measures, Chow estimates the Tseung Kwan O plot will be sold at about HK$2.423 billion, equivalent to a floor price of HK$4,300 per square foot - down 8.5 percent from an adjacent plot sold in late September.

Chow also cut 5 percent off his forecast on the Sha Tin plot selling price to HK$2.249 billion, equivalent to a floor price of HK$4,000 per square foot.

However, a majority of economists in the city believe there is little room for price correction although slower transaction volumes are well expected. CLSA only expects some 1 to 2 percent immediate home price drop while Deutsche Bank estimated a modest 5 percent price decline in the coming few months as tight home supply and low cost of loans in the city will remain the key supports for property prices.