Sun Hung Kai Properties Ltd's The Arch luxury residential tower stands at the Kowloon side of Hong Kong. The company may bid in the city's first land auction in the Year of the Tiger next Monday. Bloomberg News

HONG KONG: Sun Hung Kai Properties and Cheung Kong are among the heavyweights that may bid in Hong Kong's first land auction of the year next Monday.

Developers will bid for the site in the Tseung Kwan O area with price estimates that range from HK$2.6 billion to HK$3.4 billion. According to the median projection of five analysts at Bloomberg News, it may fetch HK$2.9 billion.

"This auction should draw interest from most of the big players," said Buggle Lau, chief analyst at Midland Holdings Ltd, Hong Kong's biggest publicly traded real estate agency.

"When we have a large plot available, they'll all want to get their hands on it," he said.

Sun Hung Kai, Hong Kong's biggest property company by market value, is interested in bidding for the 132,000 square foot (12,300 square meters) site, said spokeswoman Fiona Wan.

Winnie Cheong, a Cheung Kong spokeswoman, didn't return phone calls seeking comment.

"There are developers who are still selling new apartments in that area, so we'll see plenty of bids," said Alnwick Chan, executive director at property consultant Knight Frank LLP in Hong Kong, who estimated the land will fetch HK$2.9 billion.

The property can be developed into apartments with floor area as large as 728,000 square feet and is located on the same block as a 1,028-apartment complex being developed by Sun Hung Kai.

Cheung Kong, the developer controlled by Hong Kong's richest man, Li Ka-shing, has five projects in the district that are either completed or being built, according to its website.

Developers trigger government auctions from a list of available sites by promising to pay a minimum amount.

In December, Sino Land Co and K Wah International Holdings Ltd together paid HK$10.4 billion, missing the low end of analysts' estimates, in the city's biggest public land sale in two years.

Hong Kong builders are racing to add new homes after prices rose last year, stoked by shortages, low mortgage rates and buying by mainland residents. The number of private homes completed may almost double this year after falling to a 12-year low of 7,200 in 2009, Centaline Property Agency Ltd said last month.

Mortgage rates in Hong Kong are the lowest in at least 20 years, as far back as records are available, according to mReferral Mortgage Brokerage Services.

HSBC Holdings Plc, the city's biggest bank by deposits and assets, will start issuing mortgages linked to the rate for interbank lending, which fell to a record in December.

Mainland residents, whose wealth has been boosted by stock market gains and record-low interest rates, helped spur last year's gains in Hong Kong property prices. An estimated 18 percent of buyers of the city's luxury homes, or those worth more than HK$10 million, in 2009 were from the mainland, according to Centaline.

Bloomberg News

(HK Edition 02/20/2010 page2)