June 16 (Bloomberg) -- Hong Kong billionaire Lee Shau-kee’s Henderson Land Development Co. said the sale of 20 luxury apartments collapsed, ending HK$2.67 billion ($342 million) in deals that sparked a government inquiry and fueled efforts to rein in home prices.
Most buyers pulled out of the 39 Conduit Road project in Hong Kong’s Mid-Levels district, Henderson said in a filing to the stock exchange yesterday, responding to government demands for more information on the sales of 24 units. Henderson said it has sold four of the units and will record a charge of HK$734 million in its half-year results.
The failure of the sales, including a unit that would have set a world record price of HK$88,000 ($11,300) per square foot, marks a setback for Hong Kong’s second-richest man as regulators try to cool the city’s surging property market. Lee had said in March buyers could have more time to complete the deals.
The cancellations are “quite a negative surprise,” said Raymond Ngai, Hong Kong-based analyst at JPMorgan Chase & Co. “Those record prices they reported earlier, I doubt they’ll be able to sell them at those prices again,” Ngai said by telephone. “To sell them for around HK$30,000 per square foot is still quite possible. But selling an apartment at HK$70,000 a square foot is just too out of line with the market.”
No Price Cuts
“We won’t be cutting prices,” Lee, Hong Kong’s second- richest man, told reporters yesterday. “Maybe we’ll make more money when we sell these apartments again.”
Henderson announced the sale cancellations after the stock market in Hong Kong closed yesterday and the market is shut for a public holiday today. Henderson Land shares closed at HK$47.80 yesterday and have slumped 18 percent this year, the biggest drop among the seven-member Hang Seng Property Index.
Responding to an outcry over rising property prices last year, Hong Kong raised down-payments on luxury homes to 40 percent from 30 percent and clamped down on marketing techniques. The HK$439 million apartment Henderson had said was sold for a record -- based on usable space excluding common areas -- was listed on the 68th floor while it was actually on the 45th. Floor numbers are often skipped in Hong Kong to avoid those considered unlucky.
Henderson included sales of the 24 apartments plus one that was sold in a completed transaction as part of its revenue of HK$15.2 billion for the 18 months ended December 2009, the company reported March 30.
Prices Climb
The total price of the 20 apartments whose sales collapsed came to HK$2.67 billion, Henderson spokeswoman Bonnie Ngan said by telephone today.
Henderson said yesterday it was confident in selling the apartments because of the “prestigious” location, and will be “sparing” with sales.
Hong Kong’s government responded to Henderson’s filing, saying “clear market information” is important to the city. “The government is determined to create a fairer and a more transparent environment for flat purchasers,” the government said in a press release on its website.
Home prices in Hong Kong have risen 5.7 percent this year, adding to 2009’s 29 percent advance and raising concerns the market is overheating. Hong Kong builders often sell apartments before they are completed, drawing in customers by showing models of the homes.
The government this month tightened rules on new home sales, including the use of show apartments and asking developers to disclose properties sold to their own executives.
Financial Secretary John Tsang in February announced higher stamp duty on luxury properties and pledged to raise the supply of land as it wants to reduce the risk of “a property bubble” and keep housing affordable.
To contact the reporters on this story: Kelvin Wong in Hong Kong at kwong40@bloomberg.net Last Updated: June 16, 2010 01:59 EDT
Most buyers pulled out of the 39 Conduit Road project in Hong Kong’s Mid-Levels district, Henderson said in a filing to the stock exchange yesterday, responding to government demands for more information on the sales of 24 units. Henderson said it has sold four of the units and will record a charge of HK$734 million in its half-year results.
The failure of the sales, including a unit that would have set a world record price of HK$88,000 ($11,300) per square foot, marks a setback for Hong Kong’s second-richest man as regulators try to cool the city’s surging property market. Lee had said in March buyers could have more time to complete the deals.
The cancellations are “quite a negative surprise,” said Raymond Ngai, Hong Kong-based analyst at JPMorgan Chase & Co. “Those record prices they reported earlier, I doubt they’ll be able to sell them at those prices again,” Ngai said by telephone. “To sell them for around HK$30,000 per square foot is still quite possible. But selling an apartment at HK$70,000 a square foot is just too out of line with the market.”
No Price Cuts
“We won’t be cutting prices,” Lee, Hong Kong’s second- richest man, told reporters yesterday. “Maybe we’ll make more money when we sell these apartments again.”
Henderson announced the sale cancellations after the stock market in Hong Kong closed yesterday and the market is shut for a public holiday today. Henderson Land shares closed at HK$47.80 yesterday and have slumped 18 percent this year, the biggest drop among the seven-member Hang Seng Property Index.
Responding to an outcry over rising property prices last year, Hong Kong raised down-payments on luxury homes to 40 percent from 30 percent and clamped down on marketing techniques. The HK$439 million apartment Henderson had said was sold for a record -- based on usable space excluding common areas -- was listed on the 68th floor while it was actually on the 45th. Floor numbers are often skipped in Hong Kong to avoid those considered unlucky.
Henderson included sales of the 24 apartments plus one that was sold in a completed transaction as part of its revenue of HK$15.2 billion for the 18 months ended December 2009, the company reported March 30.
Prices Climb
The total price of the 20 apartments whose sales collapsed came to HK$2.67 billion, Henderson spokeswoman Bonnie Ngan said by telephone today.
Henderson said yesterday it was confident in selling the apartments because of the “prestigious” location, and will be “sparing” with sales.
Hong Kong’s government responded to Henderson’s filing, saying “clear market information” is important to the city. “The government is determined to create a fairer and a more transparent environment for flat purchasers,” the government said in a press release on its website.
Home prices in Hong Kong have risen 5.7 percent this year, adding to 2009’s 29 percent advance and raising concerns the market is overheating. Hong Kong builders often sell apartments before they are completed, drawing in customers by showing models of the homes.
The government this month tightened rules on new home sales, including the use of show apartments and asking developers to disclose properties sold to their own executives.
Financial Secretary John Tsang in February announced higher stamp duty on luxury properties and pledged to raise the supply of land as it wants to reduce the risk of “a property bubble” and keep housing affordable.
To contact the reporters on this story: Kelvin Wong in Hong Kong at kwong40@bloomberg.net Last Updated: June 16, 2010 01:59 EDT
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