US$1.5 billion Hong Kong residential plot receives only six bids after 38 expressions of interest last month

By Sandy Li sandy.li@scmp.com / https://www.scmp.com/business/article/3034252/us15-billion-hong-kong-residential-plot-receives-only-six-bids-after-38?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp | October 29, 2019 12:24 PM SGT
The Hong Kong protests continue to weigh on sentiment in the city's property market " the world's least affordable real-estate sector. A prime residential site next to the Wong Chuk Hang MTR Station, which would require a total investment of up to HK$11.8 billion (US$1.5 billion), drew a lukewarm response on Wednesday, in a sign that there was little appetite for big-ticket deals.
A total of 38 players had submitted expressions of interest for a tender for the fourth phase last month, but only six submitted bids according to MTR Corporation, which is acting as the government's agent. These include Sun Hung Kai Properties, CK Asset Holdings, Henderson Land Development, Great Eagle Holdings, Kerry Properties and a consortium formed by Wheelock and Company, Chinachem Group and China Overseas Land & Investment.
"The response is disappointing," said Vincent Cheung, managing director of Vincorn Consulting and Appraisal, who expected at least 10 bidders.
"Developers' bidding interest will be affected by the recent social unrest, the unsettled US-China trade war and the soon-to-be implemented vacancy tax," said Thomas Lam, executive director at Knight Frank.
The flats to be built on the plot are not expected to benefit from a recent relaxation in mortgage lending announced by Hong Kong leader Carrie Lam Cheng Yuet-ngor last week, and this might have contributed to the lukewarm response by developers, according to the industry insiders.
According to the changes announced, homebuyers can avail mortgages of up to 90 per cent " up from 60 per cent previously " of the value of flats worth up to HK$8 million. For flats worth up to HK$10 million, homebuyers can avail loans equalling 80 per cent of a property's value, up from 50 per cent previously.
According to Vincorn's Cheung, a 300 sq ft unit on the site would go for HK$8.4 million, which would mean buyers will not be able to apply for a 90 per cent home loan.
"The easing in financing will lure developers to build mass homes instead of the mid to upper end of the segment," he said.