HONG KONG (Reuters) - Two mainland Chinese firms will pay a forecast-beating HK$3.17 billion ($406.41 million) for a plot of residential land on the outskirts of Hong Kong, the Lands Department said on Wednesday, potentially fuelling already sky-high property prices.
The city’s private home prices have hit record highs for six months in a row, posing a challenge to incoming leader Carrie Lam, who is due to be sworn in by Chinese President Xi Jinping on July 1.
The dearth of supply, low interest rates, and the flow of capital from mainland China have pushed prices up over 137 percent since the financial crisis in 2008, making the city one of the world’s most expensive property markets.
The subsidiaries of Chinese developers Road King Infrastructure Ltd and Shenzhen Investment Ltd beat nine other companies to win the land deal in western New Territories’ Tuen Mun district, which is about an hour away from the central business district.
The price beat market expectations, which ranged from HK$2.12 billion to 2.6 billion.
Based on the land premium, flats at the residential project would have to be sold for at least HK$16,000 per square foot, according to Thomas Lam, senior director at property consultancy Knight Frank.
This estimate is over 50 percent higher than the district’s current average home price of HK$10,600 per square foot, according to data from property agency Midland Realty.
The site, at some 12,000 square metres, has a maximum gross floor area of 44,000 square metres.
($1 = 7.8001 Hong Kong dollars)
Reporting by Venus Wu; editing by Susan Thomas