Govt may free up land for sale to prevent property bubble
HONG KONG: Henderson Land Development said yesterday it sold a Hong Kong apartment for a record price hours after the island's Chief Executive Donald Tsang said the government may release more land to deflate a property bubble.
Henderson sold a duplex unit on the 68th floor of 39, Conduit Road in the posh Mid-Levels district for HK$71,280 (S$12,900) per square foot (psf) - setting a world record psf for an apartment and surpassing prices in London.
The five-bedroom duplex suite was sold to an unidentified buyer from mainland China.
The developer said it may ask for HK$100,000 psf for two penthouses on the 88th floor of the project.
Property prices in Hong Kong have surged 26 per cent this year despite the economic downturn as there was strong demand for luxury property from wealthy Chinese and little supply of new homes.
Hong Kong's government, which controls land supply, has not sold residential land for 1-1/2 years.
'The relatively small number of residential units completed and the record prices attained in certain transactions this year have caused concern about the supply of flats, difficulty in purchasing a home and the possibility of a property bubble,' Mr Tsang said in his annual policy address.
He said his administration will monitor 'market changes' closely in coming months, and may direct the Urban Renewal Authority and subway operator MTR Corp, both government-controlled, to bring readily available building sites to market.
Hong Kong's currency peg to a weak US dollar makes property attractive to foreign investors.
The peg forces Hong Kong to track US interest rates - which are expected to stay very low for some time - unlike South Korea, which has threatened to raise rates soon to stave off a property bubble.
Developers have been wooing millionaires from China with a slew of all-expenses paid property-viewing tours.
'People are paying what I describe as trophy prices which don't bear any reality with what is happening within the economy,' said Mr Nicholas Brooke, chairman of real estate consultancy Professional Property Services in Hong Kong.
Money from new stock market listings and easy bank lending also allow Chinese to snap up luxury property, he said.
Mr Thomas Lam, Henderson's general manager for sales, said the company sold the 39, Conduit Road unit for HK$439 million, or HK$88,000 psf of space inside the apartment, equal to £7,102 (S$15,670) at yesterday's exchange rate. This breaks the previous record of £6,000 psf set by an apartment in One Hyde Park in London last year, Mr Lam said.
Sun Hung Kai Properties last month raised the asking price of two penthouses in Hong Kong by 50 per cent to a record HK$75,000 psf, including a share of common areas in the building. On that basis, Henderson sold its apartment for HK$71,280 psf.
REUTERS, BLOOMBERG, ASSOCIATED PRESS
Source: Straits Times, 15 Oct 2009
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