Hong Kong company sells residential land at loss in rare move citing uncertain property market

The coronavirus outbreak has disrupted economic activity, clouding the outlook for Hong Kong's usually buoyant property market. PHOTO: AFP

HONG KONG (REUTERS)- Hong Kong's Goldin Financial Holdings on Monday (May 11) said it has sold a residential land parcel at a loss of HK$2.6 billion (S$474 million), in a rare move aimed at reducing debt given an uncertain property market amid economic downturn.

The firm's stock rose 4.2 per cent following the announcement.

Selling undeveloped land bought by tender is unusual. For Goldin, however, the sale of land in the Kai Tak district marks the second time in a year for such a purchase to go awry.

Last May, Goldin won the tender to buy a commercial land parcel in the same district worth about US$1.4 billion (S$1.98 billion). However, it dropped the deal a month later at the expense of its deposit citing economic instability brought about by anti-government protests.

This time round, the novel coronavirus outbreak has disrupted economic activity, clouding the outlook for the territory's usually buoyant property market.

Goldin in a bourse filing said it had agreed with Top Family Group on Sunday to sell the land which could potentially yield a gross floor area of up to 53,394 square metres for HK$7.05 billion.

The price is 21 per cent lower than in November 2018, when Goldin bought the land parcel from the government for HK$8.9 billion with plans to build residential apartments.

"Considering the preliminary stage of development of the property and the significant capital required for the project, the directors adopted a prudent approach to retain more cash for the group's existing business, against the uncertain outlook in the property market and the overall economic downturn in Hong Kong," Goldin said in the filing.

The loss incurred from the sale also included interest charges from bank loans.

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