Bricks and Mortar | Sharp drop in land prices unlikely for prime sites in Hong Kong
Correction in properties in urban areas will be less severe than those in the New Territories
Recent land sales results have shown the government is willing to accept lower offers for its sites.
The trend is reflected in the sale of the Whitehead residential site in Ma On Shan, which Sun Hung Kai Properties bought last month for about HK$1.83 billion or HK$4,241 per square foot, 18 per cent less than a site in the district acquired by Cheung Kong in November 2012.
But the city's current average property price is still 2 per cent higher than in 2012, according to Centaline Property Agency's Centa-City Leading Index, a barometer of the local property market.
Another example of the downward trend is the case of the Lands Department charging a land premium of HK$2.71 billion or HK$2,059 per square foot for phase four of Lohas Park in Tseung Kwan O at the end of last month. The levy was 15 per cent less than that charged for phase three in 2007. Nonetheless, property prices have surged 117 per cent since then.
[Developers] have lowered their offers for land acquisitions to maintain margins
In another example, Far East Consortium International bought a residential site in Tai Wai for HK$148 million or HK$3,336 per square foot. It is the lowest price paid for a residential site in the eastern New Territories over the past 10 years.
These sales show land prices are falling, the result of higher construction costs and weakening market sentiment.
