Hong Kong’s recent land auction has beaten pre-sale projections, invalidating government efforts to curb the rising prices and cool public resentment at the city’s sizzling real estate market.
Hong Kong has launched a series of land auctions over the past 18 months and amid warnings of an impending property bubble, the city’s financial chief vowed to continue boosting the supply of land in February.
Authorities have also implemented various cooling measures including tighter mortgage lending policies.
However, prices have continued to soar, with a housing site in Kowloon district selling for HK$1.52 billion (S$241.2 million).
The plot had been anticipated to yield approximately HK$1.28 billion, according to seven surveyors and analysts surveyed by Dow Jones Newswires, and sold for nearly 70 percent more than its HK$900 million opening bid.
“The market believes property prices will continue to rise,” said Yu Kam-hung, a Senior Managing Director of Valuation and Advisory Services at CB Richard Ellis (CBRE).
“There is still strong demand and a very limited supply of housing. Hong Kong is an international financial centre and it’s very difficult to control property prices,” Mr. Yu added.
A joint venture (JV) owned by real estate giant Wing Tai Properties and Nan Fung Group acquired the prime plot of land, Dow Jones said.
Hong Kong’s average home prices rose approximately 24 percent in 2010, with some lawmakers clamouring for the continuation of a subsidised housing scheme because of concerns regarding the city’s widening income gap.
The decision to sell off more land in the city, famous for its super-rich tycoons and skyrocketing residential rents, came after a study by US consultancy Demographia earlier this year found that Hong Kong’s home prices were the most expensive in the world.
Ballooning prices have incited a warning from the International Monetary Fund of a possible asset bubble and public anger in a city generally associated with laissez-faire economic policies.
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