In the latest sign that Hong Kong’s property correction is deepening, a parcel of land sold by the government in the New Territories went for nearly 70 percent less per square foot than a similar transaction in September.
The 405,756 square foot site in Tai Po sold for HK$2.13 billion ($274 million) or HK$1,904 per square foot, in a tender that closed on Feb. 12, according to the Hong Kong Lands Department website. The buyer was Asia Metro Investment Ltd., a subsidiary of China Overseas Land & Investment Ltd.
The plunge in the price of land comes amid weaker appetite from Hong Kong developers against the backdrop of a nearly 11 percent drop in housing prices since their September high, according to the Centaline Property Centa-City Leading Index. In January, sales of new and secondary homes reached their lowest monthly level since Centaline started tracking data in January 1991. Hong Kong home prices surged 370 percent from their 2003 trough through the September peak before the correction began, spurred by a rising supply of housing and a slowdown in China. Lower prices paid for land could eventually lead to cheaper home prices down the road, and are viewed as a leading indicator of the negative sentiment on the market.
Adding to the downward pressure on prices was the government on Jan. 13 raising its five-year target for new housing supply to 97,100 new homes, up from a previous estimate of 77,100 units.
The Tai Po sale came on the heels of a parcel of land sold by the government in Kowloon on Feb. 3 for HK$4,249 per square foot in Sham Shui Po district to a subsidiary of Vanke Property (Hong Kong) Company Ltd., according to Bloomberg Intelligence.