Li Ka-shing, Hong Kong’s richest man, signalled his confidence in the real-estate market by paying more than estimated for two sites, four days after the government tightened loan rules to prevent a possible bubble.
Cheung Kong (Holdings) Ltd, controlled by Li, bought a property in the Ho Man Tin district for HK$4.1 billion ($530 million) and a plot in Hung Hom for HK$3.51 billion at a government auction yesterday. Both sites fetched more than the highest forecasts in a Bloomberg survey of seven analysts.
The auction followed the government’s August 13 announcement that it raised down-payment ratios and would increase land supply to curb a 45 per cent jump in housing prices since the start of 2009.
Li said earlier this month he was optimistic about the global economy and his companies’ prospects, and will buy shares of Hutchison Whampoa Ltd and Cheung Kong after they reported earnings that exceeded analysts’ estimates.
“The prices reached show that the developer has a very high level of confidence in the residential market, particularly in sites in urban areas,” said Buggle Lau, chief analyst at Midland Holdings Ltd, Hong Kong’s biggest publicly traded real estate broker.
Cheung Kong advanced 0.1 per cent at the 4 pm close of trading in Hong Kong after rising as much as 1.7 per cent. Sun Hung Kai Properties Ltd. rose 0.5 per cent. The Hang Seng Property Index rose as much as 1.4 per cent before closing 0.3 per cent lower.
Lowered expectations
Cheung Kong last bought land from a government auction in November 2006, when the company and Sino Land Co together paid HK$5.18 billion for a site in the Ma On Shan section of the Sha Tin district.
At least four of the analysts surveyed cut their forecasts after the August 13 measures. Their estimates for the 394,000 square-feet (36,600 square-metres) Ho Man Tin site ranged from HK$3.55 billion to HK$3.94 billion, with a median estimate of HK$3.75 billion. The Hung Hom district plot with buildable area of 366,000 square feet was estimated to be sold for HK$2.2 billion to HK$2.9 billion, with a median of HK$2.5 billion.
The estimates didn’t take into account the views both sites offer, Victor Li, the son of Li Ka-shing and deputy chairman of Cheung Kong, told reporters after the two-hour auction broadcast on local television.
