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Discount on HK land  points to worsening housing market

China Overseas Land pays HK$13,523 psf or HK$8b for Kai Tak site which can yield 590,000 sq ft of floor area

Hong Kong

ONE of Hong Kong's biggest sales of residential land this year added to the picture of a worsening home market.

China Overseas Land & Investment won the site in Kai Tak on Thursday with a bid of HK$13,523 (S$2,360) per square foot of floor area. That's 13 per cent less than what Goldin Group paid last month for a nearby parcel.

"The number of bids drawn this time was small, and that has to do with the current market situation," said James Cheung, a senior associate director at Centaline Surveyors. Homes on the site will lack good views, another factor capping the price, he said.

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Hong Kong's home prices are sliding and land sales have had a rough year after a record-breaking 2017. Goldman Sachs Group Inc forecasts a 15 to 20 per cent decline in property prices over two years as interest rates in the city rise in tandem with the US.

The Kai Tak site can yield 590,000 sq ft of floor area, making it the second-biggest residential land sale by area this year. China Overseas Land is paying HK$8 billion.

The value of land parcels sold by the government in 2018 stands at HK$80 billion, down by 37 per cent from last year, according to data compiled by Bloomberg. In October, the government failed to sell a residential site on the Peak. So far, home prices have dropped 7 per cent from an August high. BLOOMBERG