Hong Kong developer Sun Hung Kai Properties bought a prime piece of luxury real estate in space-starved Hong Kong for HK$4.49 billion ($576 million). This was a closely contested bidding, and the final price was within the top-end of initial estimates of HK$3.5 billion to HK$4.52 billion. The opening bid at this government land auction was HK$3.1 billion. The site stands on Stubbs Road on Hong Kong Island and covers about 14,700 square meters. The minimum and maximum gross floor areas are 10,800 square meters and 16,800 square meters respectively. According to Victor Lui of Sun Hung Kai Real Estate Agency Ltd., the price is quite reasonable for the given property, since prime sites in luxury residential areas are rare. The company has plans of investing HK$8 billion to develop the site.
In Hong Kong, property prices have been skyrocketing, partly fuelled by the booming Chinese economy. The rising prices have become a political issue in the city, with affordability and a growing wealth gap becoming matters of concern. There was a 30 percent rise in prices in 2009 and a 24 percent jump in 2010. In fact, home prices have passed the previous high of 1997. So much so that the government jumped in and has planned to make 52 residential sites available for sale in this fiscal. Since 2009, the government has been working on avoiding the build-up of a property bubble.
The auction on Thursday also witnessed two other sales of properties for luxury homes. One was a 2,810-square-meter site in Kowloon that was snapped up by China Overseas Land & Investment Ltd. for HK$579 million and a 23,480-square-meter plot in New Territories that sold for HK$662 million to Cheung Kong Holidings Ltd.