Pronouncements of Li Ka-shing’s retreat from Greater China real estate markets may have missed the mark after Hong Kong’s richest man beat out Sun Hung Kai, China Vanke and 14 other bidders to win its first Hong Kong land auction in four years.
Li’s Cheung Kong Property Holdings agreed to pay the Hong Kong Lands Department HK$1.95 billion ($252 million) for a residential site in Kau To Shan, near Sha Tin in the New Territories – a price which exceeded analyst predictions by some 33 percent, according to an account in the South China Morning Post.
During the past month Hong Kong’s sliding residential market has spiked upwards after a year of declining prices and slowing transaction volumes, with overall transactions in the market up 35 percent in the first two weeks of September, compared to the same period last month.
Did Superman Really Lose His Faith?
While Li has always declared his faith in the economies of Hong Kong and the mainland, the residential site purchase comes only a few weeks after reports surfaced that the investor dubbed “Superman” for his market prowess had put The Center, the tallest building in his property portfolio, up for sale. The reported disposal of the office tower on Hong Kong’s Queens Road could bring in as much as $4.5 billion for Li and Cheung Kong, and follows a number of other asset sales in Hong Kong and mainland China which investors had taken as a sign of Li’s declining interest in real estate in the region.
As recently as 2011, companies controlled by Li had bought up 37 percent of the land sold at auction during the year, but in the last four years the property tycoon has stayed away from land auctions in his home town, as land premiums have continued to rise.
During those four years, Li had disposed of a number of assets in Hong Kong and China, including selling the Oriental Financial Center in Pudong for US$1.155 billion in 2013, and in 2014 companies and funds controlled by Li sold mainland property assets worth another $1.2 billion.
Hong Kong Rebound Brings Hope for Developers
During the first half of this year mass market home prices in Hong Kong slid by more than eight percent, according to research by JLL, with Goldman Sachs predicting an overall 20 percent drop in the city’s housing prices. The decline in home prices had also been bringing down demand for new sites, with some plots going for as much as one-third below expectations.
CK Property’s new site on Lai Ping Road near Sha Tin is in a newly developing area about 80 minutes from Central by public transport
September has brought new hope for developers such as Cheung Kong, however, with Midland Realty reporting that sales of new homes in Hong Kong are up by 74.2 percent in the first two weeks of the month, compared to the same period in August.
With the rebound in housing demand over the last month, and given the relatively affordable price tag of HK$1.95 billion for a site that will yield 22,676 square metres of homes, Li and Cheung Kong may be just be betting that Hong Kong’s property market is worth at least one more try.