Govt may release more land to deflate property bubble: Donald Tsang
Henderson Land Development Co said it sold a Hong Kong apartment at a record price hours after Chief Executive Donald Tsang said the government may release more land to deflate a property bubble.
Henderson, controlled by billionaire Lee Shau-kee, sold a duplex unit on the 68th floor of 39 Conduit Road for HK$71,280 (S$12,798) per square foot, and said it may ask HK$100,000 per square foot for two penthouses on the 88th floor of the project.
Builders completed the fewest apartments since at least 1972 last year. Prices, especially for luxury units, have rallied in 2009 on record-low interest rates and an influx of money from China. The government is Hong Kong’s biggest provider of land and has altered supply to support or depress prices.
‘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.
Mr Tsang, 65, said his administration will closely monitor ‘market changes’ 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.
Mr Tsang, Hong Kong’s leader since 2005, may be concerned the luxury-market boom will fuel wider price increases, hurting affordability, Centaline Property Agency Ltd. analyst Wong Leung-sing said.
‘He’s more concerned whether mass market housing prices would get pulled up by the momentum in the luxury market,’ Mr Wong said. ‘If that happens it’ll become a social issue.’ Instead of changing the government’s land-sales system, Mr Tsang is more likely to have the MTR speed the sale of suburban land of interest to all big builders, Mr Wong said.
The city’s Hang Seng Property Index, which includes six companies, climbed 1.6 per cent yesterday, taking this year’s gain to 66 per cent. The benchmark Hang Seng Index rose 2 per cent and has advanced 52 per cent this year to a 14-month high.
Hong Kong, where property companies owned by billionaires including Henderson’s Mr Lee and Cheung Kong (Holdings) Ltd’s Li Ka-shing account for about a 10th of the benchmark stock index, stopped supplying new land in 2002 in the midst of a seven-year property rout. The government started a new system of land auctions in 2004, after prices stabilised.
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 per square foot of space inside the apartment, equal to £pounds;7,102 (S$15,758) at yesterday’s exchange rate. This breaks the previous record of £pounds;6,000 per square foot set by an apartment in One Hyde Park in London in 2008, Mr Lam said at a press conference in Hong Kong yesterday.
Sun Hung Kai Properties Ltd, the world’s largest developer by market value, last month raised the asking price of two penthouses in Hong Kong by 50 per cent to a record HK$75,000 a square foot, including a share of common areas in the building, as demand surges for luxury apartments. On that basis, Henderson sold its apartment for HK$71,280 per square foot.
Housing completions in Hong Kong have been lower than initial government projections in the past two years. Builders finished 8,780 units, fewer than the forecast 10,980 last year, and 10,470 in 2007 against the forecast 12,740, the Rating and Valuation Department said in March. It then estimated completions at 14,740 for this year.
Source: Business Times, 15 Oct 2009
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