A luxury residential site in Hong Kong has been sold at an auction for 26 percent more than the estimates of analysts, a sign that developers are confident that home prices will withstand an increase in supply and tighter mortgage rules.
The land located in the Kowloon Tong district was acquired by Kerry Properties Ltd for HK$1.29 billion, setting a psf record for the Kowloon Peninsula of HK$16,587, said property broker Midland Holdings Ltd.
Prices have surpassed estimates in both land auctions since Hong Kong intensified its efforts to temper the property market in August. Singapore also imposed anti-speculation measures this week, highlighting the risk of asset bubbles in Asia as the economic recovery in the region and record-low US interest rates spurs demand.
According to Singapore-based economist David Cohen of Action Economics, the Kowloon Tong auction price is “just one more warning flag” for policy makers. “We will see more steps on property markets in Asia, just like Singapore. Asian policy makers are aware of the U.S. experience, of the potential for bubbles to develop in the housing market,” he said.
It was the sixth auction carried out by the government and was triggered by the applications of developers.
Estimates of five analysts in a Bloomberg News poll for the site at Kowloon Tong ranged between HK$930 million and HK$1.1 billion, with a median of HK$1.02 billion.
“The result is out of our expectation and it will improve market sentiment,” said Alvin Lam, executive director at the surveyor arm of Midland. “The price is still reasonable as some new developments in that area are now selling at around HK$20,000 a square foot.”