Henderson Land Development Co said the sale of its 20 luxury apartments had collapsed, putting an end to a HK$2.67-billion (S$478.2 million) deal that fuelled efforts to control home prices and sparked a government inquiry.
In a filing with the stock exchange, Henderson said most buyers had withdrawn from the 39 Conduit Road project located in the Mid-Levels district, responding to the government’s demands to release more data on the sales of 24 units. According to the company, it had sold four units and would record HK$734 million charges in its half-year results.
The failure of sales is a setback for Lee Shau-kee, chairman of Henderson and the second richest man in Hong Kong, as regulators seek to cool a soaring property market.
The cancellations of the deal are “quite a negative surprise”, said Raymond Ngai, an analyst at JPMorgan Chase & Co. “Those record prices they reported earlier, I doubt they’ll be able to sell them at those prices again . . . To sell them for around HK$30,000 per square foot is still quite possible. But selling an apartment at HK$70,000 a square foot is just too out of line with the market.”
“We won’t be cutting prices,” said Mr. Lee. ”Maybe we’ll make more money when we sell these apartments again.”
Henderson added that it was optimistic in selling the apartments due to their “prestigious” location and will be “sparing” with sales.
The company announced cancellations of the sale following Tuesday’s closure of the stock market due to a public holiday.
In 2009, Hong Kong increased downpayments on luxury houses from 30 percent to 40 percent and limited marketing techniques, in response to protests over increasing property prices.
The company included sales of 24 apartments in addition to a unit sold in a completed deal as part of its HK$15.2-billion revenue for the 18 months ending December 2009.
The total price of 20 apartments whose sales had collapsed reached HK$2.67 billion, said Bonnie Ngan, a spokeswoman for Henderson.
In response to Henderson’s filing, the government said that “clear market information” is crucial to the city. “The government is determined to create a fairer and a more transparent environment for flat purchasers.”
Home prices have increased 5.7 percent this year, adding to the 29 percent advance last year, raising concerns that the residential market is overheating.
The government has tightened regulations on new home sales, asking developers to declare properties sold to their own executives and implementing unfurnished show apartments.
Financial Secretary John Tsang has announced higher stamp duty on luxury properties and vowed to increase land supply as he intends to keep housing reasonably priced and cut the risk of “a property bubble”.