China Jitters Cut Land Price in Hong Kong

The government on Wednesday sold the last prominent vacant plot in Hong Kong’s financial district, a prime office development site, for $346 million. While the government claimed the sale was a significant indicator of confidence in Hong Kong, the purchase price was well below predictions made before the crackdown on student protest in China.

The bid for the land was originally expected to set a record before the rocketing property boom took a knock last month as the events in Tian An Men Square in Beijing seriously shook Hong Kong, which is destined to return to Chinese control in 1997.

Early estimates for the property were about $500 million. After the Beijing crisis, however, the government, which put the site on the market, had lowered its aim to about $400 million.

Considered Good

Great Eagle, a local property and construction company, bid in the name of Shinea Hill Development, a wholly owned subsidiary. It is setting up a consortium that includes C. Itoh, a Japanese trading house.

Local bankers and analysts said Wednesday that the Great Eagle price was good given the prevailing political circumstances. They argued that it was in line with what could have been expected a year or so ago.

Bob Pope, the government’s acting director of building and lands, said he was “satisfied” with the winning bid. He said development of the site, which includes two office towers of 53 and 39 stories, would cost more than $600 million, and was a “vote of confidence in the future.”

The winning bid was the highest of five, which ranged upwards from about $250 million, in a public tender for the 92,000-squate-foot site, adjacent to a new Bank of China building.

Most bids indicated a substantially greater slide in property market prices than the 20% fall forecast in recent weeks. Earlier indications of the price falls had come in an auction of smaller government-owned plots on Tuesday, which showed prices down by 20% to 25% on earlier predictions.