Illuminated buildings are seen from Victoria Peak at night in Hong Kong on Aug 28, 2019. (PAUL YEUNG / BLOOMBERG)

Hong Kong awarded a premium residential site to Wharf Development Ltd for a higher-than-expected HK$12 billion (US$1.5 billion), in a sign of early recovery for the city’s real estate market.

Wharf unit Novel Bliss Ltd won the residential land at the Peak, one of the Hong Kong Special Administrative Region’s most exclusive neighborhoods, according to a statement from the government late Wednesday. The site was previously valued by Knight Frank LLP at between HK$7.8 billion to HK$8.3 billion.

Wharf unit Novel Bliss Ltd won the residential land at the Peak, one of the Hong Kong Special Administrative Region’s most exclusive neighborhoods, according to a statement from the government late Wednesday

The plot can supply about 24,093 square meters (259,335 square feet) of floor area of homes. The developer is expected to build houses as well as apartments on the site.

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The luxury residential market is the hardest hit this year as Chinese mainland buyers are scant. Prices for high-end homes fell by 8 percent in 2020, compared with the 1 percent drop in the mass market, data from Jones Lang LaSalle Inc show.

JLL expects values of luxury properties to fall as much as 10 percent next year.

The site is a portion of a larger plot that was put up for public tender back in 2018. However, the sale failed as none of the bids submitted reached the government’s requirement. The authority therefore split the land parcel into half in order to attract better offers.

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The government recently scraped plans to introduce a tax on vacant homes, which could ease the pressure on luxury housing developers. It’s usually harder to clear expensive home inventory.

Other bidders in the tender included Sun Hung Kai Properties Ltd, CK Asset Holdings Ltd and Henderson Land Development Co.

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