Finance & Business World

Henderson Land Development Co. said it sold a duplex apartment in Hong Kong for a record price, hours after city Chief Executive Donald Tsang signaled the government may release more land to deflate a property bubble.

The apartment, on the 68th floor of Henderson’s 39 Conduit Road development, fetched HK$439 million ($57 million), or HK$88,000 a square foot excluding parts of the building shared by all residents, the company controlled by billionaire Lee Shau-kee said today. Henderson said it may ask HK$100,000 per square foot for two penthouses on the 88th floor.

Last year, the fewest apartments were completed since at least 1972. Prices, especially for luxury homes, have rallied in 2009 on record-low interest rates and an influx of money from China. The government is Hong Kong’s biggest provider of land and has altered supply to support or depress prices.

“The relatively small number of residential units completed and the record prices attained in certain transactions this year have caused concern about the supply of flats, difficulty in purchasing a home and the possibility of a property bubble,” Tsang said in his annual policy address.

Tsang, 65, said his administration will closely monitor “market changes” and may direct the Urban Renewal Authority and subway operator MTR Corp., both controlled by the government, to bring readily-available building sites to market.

Tsang, Hong Kong’s leader since 2005, may be concerned the luxury-market boom will fuel wider price increases, Centaline Property Agency Ltd. analyst Wong Leung-sing said.

‘Social Issue’

“He’s more concerned whether mass-market housing prices would get pulled up by the momentum in the luxury market,” Wong said. “If that happens, it’ll become a social issue.”

Instead of changing the government’s land-sales system, Tsang is more likely to have the MTR speed up the sale of suburban land, Wong said. The MTR develops sites around its stations in ventures with developers and uses the proceeds to help pay railway construction costs.

The city’s Hang Seng Property Index, which includes six companies, climbed 1.6 percent today, taking this year’s gain to 66 percent. The benchmark Hang Seng Index rose almost 2 percent and has advanced 52 percent this year to a 14-month high.

Billionaire Owners

Hong Kong, where property companies owned by billionaires including Henderson’s Lee and Cheung Kong (Holdings) Ltd.’s Li Ka-shing account for about 10 percent of the benchmark stock index, stopped supplying new land in 2002 during a seven-year property rout. The government started a new system of land auctions in 2004, after prices stabilized.

Hong Kong brokers typically count a portion of the common areas when they price properties. On that basis, the price for the 6,158 square-foot (572 square-meter) home on Conduit Road came to the equivalent of HK$71,280 a square foot, according to Thomas Lam, Henderson’s general manager for sales.

One Hyde Park in London set the previous record of 6,000 pounds (HK$74,318 or $9,590) a square foot, Lam said at a press conference in Hong Kong today.

Sun Hung Kai Properties Ltd., the world’s largest developer by market value, last month raised the asking price of two penthouses in Hong Kong by 50 percent to a record HK$75,000 a square foot, including a share of common areas in the building, as demand surges for luxury apartments.

Housing completions in Hong Kong have been lower than initial government projections in the past two years. Builders finished 8,780 units, fewer than the forecast 10,980 last year, and 10,470 in 2007 against the forecast 12,740, the Rating and Valuation Department said in March. It then estimated completions at 14,740 for this year.

Policy Changes

Tsang announced policy changes aimed at promoting the redevelopment of old industrial buildings, which have fallen into disuse as companies use cheaper factories in China instead.

Hong Kong is determined to improve air quality and will promote the use of electric cars and energy-saving light bulbs, according to Tsang.

While Shanghai has been designated by China as a center for financial services and trade — two of Hong Kong’s main industries — the development of the two cities can be cooperative, Tsang said. For example, Hong Kong can help China develop its offshore yuan business.

Hong Kong’s economy will keep improving this year, Tsang said.

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