$1.8b price tag for HK luxury site

Hong Kong's Government may sell a building site in the Peak district for HK$10.5 billion ($1.8 billion) in an auction today, underscoring demand for high-end properties in the city.

The estimate for the Mt Nicholson Rd site is the median of seven analysts in a Bloomberg News survey. Their forecasts ranged from HK$8.9 billion to HK$11.5 billion.

The Government is trying to curb a 38 per cent surge in home prices since the beginning of 2009 amid concerns housing is out of reach of ordinary residents.

The outcome of the auction may further buoy Hong Kong's luxury homes prices, said Ricky Poon, a Hong Kong-based executive director of residential sales at Colliers International.

"A better-than-expected result at this auction will have a huge impact on buyer sentiment," said Poon.

The city's home prices have gained 9.6 per cent this year and last week rose to the highest since 1997, Centaline Property Agency said on July 23.

Home prices may rise another 10 per cent in the second half if interest rates stay at two-decade lows and the local economy keeps growing, property consultant Jones Lang LaSalle said.

Authorities are investigating cancelled sales at a Henderson Land Development luxury apartment project. The site at 103 Mt Nicholson Rd has a total gross floor area of 30,180sq m.

The auction was initiated by the government, which has pledged to increase land supply to help keep home prices in check.

- BLOOMBERG