Henderson Land Development said the sale of 20 luxury apartments in Hong Kong had collapsed, ending 2.67 billion Hong Kong dollars in deals that had led to a government inquiry and fueled efforts to rein in home prices.
Most buyers pulled out of the 39 Conduit Road project in the Mid-levels district, Henderson said in a filing to the stock exchange late Tuesday, responding to government demands for more information on the sale of 24 units. Henderson, controlled by the billionaire Lee Shau-kee, said it had sold four of the units and would record a charge of 734 million dollars in its half-year results. It did not give any reason for the collapse of the deals, worth $342 million.
The failure of the sales, including a unit that would have set a world record price of 88,000 dollars per square foot, or 940,000 dollars per square meter, is a setback for the Hong Kong billionaire as regulators try to cool the property market.
The cancellations are “quite a negative surprise,” said Raymond Ngai, a Hong Kong-based analyst at JPMorgan Chase. “Those record prices they reported earlier — I doubt they’ll be able to sell them at those prices again.”
But Mr. Lee said Tuesday that the company would not be cutting prices. “Maybe we’ll make more money when we sell these apartments again,” he said.
Henderson announced the sale cancellations after the stock market in Hong Kong closed Tuesday. It remained closed for a public holiday Wednesday. Henderson Land shares closed at 47.80 dollars Tuesday and have slumped 18 percent this year, the biggest drop among the seven-member Hang Seng Property Index.
Responding to an outcry over rising property prices last year, Hong Kong raised down payments on luxury homes to 40 percent from 30 percent and clamped down on marketing techniques.
The 439-million-dollar apartment that Henderson had said was sold for a record price — based on usable space excluding common areas — was listed on the 68th floor while it was actually on the 45th. Floor numbers are often skipped in Hong Kong to avoid those considered unlucky.
Henderson included sales of the 24 apartments plus one that was sold in a completed transaction as part of its revenue of 15.2 billion dollars for the 18 months that ended December 2009, the company reported March 30.
The Hong Kong government responded to Henderson’s filing, saying “clear market information” was important to the city. “The government is determined to create a fairer and a more transparent environment for flat purchasers,” the government said in a statement.
Home prices in Hong Kong have risen 5.7 percent this year, extending the 29 percent advance in 2009 and raising concerns that the market is overheating.