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Sheung Shui Lot Fetches $61m HKD at Auction

May 5 (Bloomberg) -- Hong Kong sold a residential building site in Sheung Shui for a higher-than-estimated HK$61 million ($7.9 million USD) in the city's first sale for almost a year, indicating renewed appetite among developers for land.

Centaline Property Agency Ltd. and rival agency Midland Holdings Ltd. had estimated the 306 square-meter (3,300 square- foot) site in Sheung Shui in northern Hong Kong would sell for HK$39 million. The land was sold to Successful Properties Ltd., according to the Land Department.

Hong Kong home transactions rose to the highest level in 10 months in April, signaling the city's real estate market is recovering from a recent slump. The Hang Seng Property Index, which tracks the city's six biggest developers, has risen about 28 percent this year, making it the best-performing component in the benchmark.

"There were eleven bidders in total and that shows the market has confidence," said Alvin Lam, a director at Midland Surveyors, part of Midland Holdings Ltd. "The sale exceeded most estimates by 20 percent and this is a positive sign for market sentiment."

Hong Kong has the second-highest luxury home prices in Asia, with an average price of $16,125 per square meter, after Tokyo with an average of $17,998, according to the Global Property Guide Web site.

The number of residential units changing hands rose to 9,856 in April from 7,102 in March, the Land Registry said today on its Web site. The amount for these transactions climbed to HK$31.6 billion from HK$25.5 billion.

First Residential Sale

The government, one of Hong Kong's biggest suppliers of unoccupied land, sells land under a system where developers trigger auctions from a list of available sites by promising to pay a minimum amount.

Today's auction is the first of the fiscal year that started April 1 and the government's first public sale of a building site at least partially designated for housing since May 9, 2008, according to the Lands Department.

The winning bidder can build 1,407 square meters of floor space on the site, which has a height limit of 20 meters (66 feet), Midland said. Buyers may build retail shops below a few levels of apartments, Centaline's Wong said.

"The sale indicates positive sentiment," said C. Mills, assistant director of the Lands Department, at a press briefing today. "I don't think it will have a great impact on prices in the sector though due to the size of the lot."

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