The Hong Kong government has sold a prime site at a price lower than market analysts expected - the second consecutive time this has occured. 

The lower-than-expected price signals that the local property market has cooled down after a series of government measures and amid turmoil in global financial markets. 

The tender for the North Point site had been awarded to Ocean Century Investments Limited, a unit of billionaire tycoon Li Ka-shing's Cheung Kong (Holdings) Ltd, at a premium of about HK$6.27 billion, according to a statement issued by the Lands Department late on Aug 25. 

The government's latest tender which attracted six bidders - has drawn wide market attention after the government sold another prime residential lot located in Sha Tin district at its opening bid of HK$5.5 billion at an auction. 

This was also far below market estimates, sparking concerns over the property sector's underlying strength. 

The 7,887-square meter site in North Point, located at Oil Street on Hong Kong Island, is designated for commercial and residential development, with a maximum gross floor area of 70,200 square meters. 

The winning bid is lower than market expectations. Surveyors had previously valued the site at HK$6.47 billion to HK$9.07 billion. 

 "The lower-than-expected winning bid was mainly due to the multiple designated uses of the site-including a hotel portion, office spaces and residential units - which will complicate the development," said James Cheung, a director at Centaline Surveyors. 

"Developers were not willing to bid up the price as it was not easy for them to gauge the risk involved," he added. 

Developers were a bit cautious as the government has been proactively boosting land supply in the market, said Chan Cheung-kit, a director at Lanbase Surveyors Ltd, adding that property prices have climbed to a high level, increasing the risk of a correction in the property market. 

Home sellers have cut their asking prices recently as the transaction volume dropped significantly in recent weeks amid turmoil in the financial markets and as the effects of the government measures play out. 

New mortgage loans approved in July dropped 33.7 percent from June to HK$17.6 billion, the lowest level since April, 2009, according to data from mortgage broker mReferral Mortgage Brokerage Services. 

The government has taken a series of measures aimed at cooling down the overheating property market after home prices in the city climbed more than 70 percent from the beginning of 2009, including requiring higher down-payment ratios, imposing a penalty stamp duty of as high as 15 percent on short-term home transactions, as well as boosting land supply by accelerating land auctions and tenders. 

george@chinadailyhk.com