WORLD PROPERTY CHANNEL ®

Yoho Midtown, Hong Kong

(HONG KONG) -- Hong Kong's cyclical real estate engine is back in high gear. Prices are at near-record lofty levels and expected to rise again in 2011.

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The country's largest developer, Sun Hung Kai Properties Ltd. sold 900 apartments over the weekend for a total of HK$4.2 billion ($540 million), according to the International Property Journal.

The developer also made headlines by paying $434 million for a 130,000-square-foot plot in a Hong Kong suburb, as part of the government's first property auction of the year. Sun Hung Kai intends to build residential units on the site.

The sold apartments, ranging in size from 400 square feet to 1,400 square feet, are in the Yoho Midtown development, almost an hour from downtown.

Prices averaged HK$5,400 per square foot, sharply higher than the HK$3,000 per square foot buyers were paying for homes in Hong Kong a year ago, Bloomberg reports.

In general, prices in Hong Kong rose 29 percent in 2009, stoking concerns that a new property bubble was forming.

Last fall Henderson Land Development sold a five-bedroom apartment for HK$439 million ($56.6 million), believed to be a record for Asia.

Buyers from mainland China are driving much of the activity, accounting for 20 percent of high-end residential unit sales, according to data from Centaline Property Agency shows.

Justin Chiu

"There should be a correction at some point," Justin Chiu, executive director of Cheung Kong Holdings, told Bloomberg. "Buyers must not expect the same pace of growth in prices in 2010."

But industry boosters note prices are still below record levels. And analysts still predict prices will rise anywhere from 15 to 20 percent in the next year.

To help dampen the enthusiasm of speculators, the government recently imposed a stamp duty on sales of property of more than $2.7 million. But the recent sales activity suggests it's not working.

About 80 percent of the buyers in Yoho Midtown this weekend expect to live in the apartments, a company spokesperson said.

Forty units were immediately advertised for resale at higher prices, the South China Morning Post reported. 

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