The first strong auction of an old building appears to be the first bid, Baosheng suspects that the reserve price is high, the re-bid may drop by 20%| Finance| Daily| 20201107

[Report from this newspaper]Hong Kong is scarce in land resources. The forced auction of old buildings in the urban area is the main source of real estate developers’ increase in land reserves. However, yesterday there was the first “passed auction” incident in Hong Kong history. The old building at Nos. 73 to 75 Lion Rock Road in Kowloon City, which is owned by Baosheng Group for more than 80%, was awarded a strong auction in September this year with a reserve price of 223 million yuan. It was auctioned yesterday. However, Baosheng did not bid for the property, and without other consortium bidding, the property ended up unsold.

In recent years, Baosheng Group has mainly applied for forced auction of old buildings in urban areas to find land for development. Among them, No. 73 to 75 Lion Rock Road, Kowloon City, is a 4-storey old building over 50 years old with a site area of ​​approximately 2,812 square feet. . It is reported that Baosheng already holds more than 80% of the property rights, that is, it has acquired all residential units, and the remaining two ground shops are to be acquired. In September 2018, Shibaosheng offered a price of 92.9 million yuan to purchase shops from two ground shop owners.

As of September this year, the Lands Tribunal approved a strong auction with a reserve price of 223 million yuan. According to the ruling, it is assumed that the site is developed into a 24-storey commercial and residential building with a plot ratio of 8.476 times and a floor price of 9,372 yuan per square foot. The property was auctioned yesterday, but the Vibram Group did not bid, nor did any other consortium bid. In the end, the auction ended, which became the first case of forced auction in Hong Kong.

The property market is not optimistic next year

Baosheng Group Chairman Chen Yaozhang replied to “Apple” inquiry, saying that there was no bid to bid for the auction because the reserve price of the auction was too high, which was at least 40 million to 50 million yuan higher than the market price of about 170 to 180 million yuan, which was not economical. Lower the reserve price to a reasonable level.

Regarding the rare occurrence of unsold auctions, Chen Yaozhang believes: “Everyone knows that Hong Kong has been in chaos in the past year. In the past year, there have been anti-transmission protests. This year, the global epidemic situation is the whole year.” Chen is not optimistic about the property market trend in the first half of next year. It depends on changes in the epidemic, such as when will China and Hong Kong clear customs; when will Hong Kong have a health code; whether countries around the world can control the epidemic and resume tourism; when will they be able to produce vaccines, etc.”

In terms of the deployment of other projects of the Baosheng Group, Chen Yaozhang pointed out that the To Kwa Wan Jinhui, which is cooperating with the URA, is selling the cargo tail, and the Hongfeng Industrial Building, 33 To Kwa Wan Road, is undergoing renovation and is jointly owned by the Ma family of Tai Sang Bank The Caroline Hill Road project on Hong Kong Island is undergoing land premium.

Li Peiyi, senior director of the Capital Markets Department of Jones Lang LaSalle, said that after the property is repossessed, it depends on the plan of the big owners. If you want to change the reserve price, you need to apply to the court for an extension. If you simply re-auction, you do not need to apply to the court.

Continuous analysis of material flow

Leung Peihong, senior director of Huafang Consulting & Appraisal Co., Ltd., said that this is the first time in history that an old building on Lion Rock Road in Kowloon City has been auctioned. The focus of the unsold auction this time is particularly on the two ground shops that have not yet been acquired. The existing value assessment of shops accounted for 58.6% of the existing value of the entire old building.

Due to the impact of social movements and the epidemic, the value of shops has changed greatly from the application for forced auction to the final auction date. The applicant for the forced auction offered a total purchase price of 92.9 million yuan to the owners of the two old buildings in September 2018. If the land is sold at the reserve price, the owners of the two shops can get an additional 131 million yuan, which is 41 million more than the purchase price two years ago. %. Leung Peihong also pointed out that if the developer reapplies after the unsuccessful auction, the reserve price may be reduced by about 20%, or about 179 million yuan. He expects that similar strong auctions may recur in the future.

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