Let me use a simple arithmetic example that we learnt from our primiary school to illustrate the mindsets of the property developers how to show their hands in the Land Auction.
If you have 100 units of $12 dollar each and to add marginal auction units by 15 at cost of $15 each, the marginal addition will increase the units to 115 and the total costs to $1,425.
The implication is big here. If the auction price can push up the market price from $12 to $15, the increase is 25%, it means the profit of the original 100units will increase by 25% or $300 which is more than enough to cover the costs of the newly additional units or simply speaking it is only just a zero cost to acquire these additional new units.
The auction yesterday was clearing proving of the above fact. Cheung Kong was bidding up the land at a very high price which to the outsider were puzzled why they bought at around $10,000 per sq ft and if taking into accounts of the building costs the sales prices need to be at least 14,000 or above in to order to make a profit which were way above the secondary market-flour is more expensive than bread. But if you can think the logic from the above simple arithmetic, you know the reasons why. While pushing up the auction or market prices, at the same time they were lifting the market prices of their underlying holdings in their books too. It shows the facts that the property developers have grown to the sizes that any simple policies by the Government are no longer easy to have their desirable effects to cool down the property markets. On top of that, if we look into their financials, the property developers are now so strong that can weather any adverse market moves or tough policies put forward by the Government. The ball is now in the court of our Upper Albert Road and wonder there are someone wise and bold enough to counter the balances of these powerful, greedy & fierce giant developers.
If you have 100 units of $12 dollar each and to add marginal auction units by 15 at cost of $15 each, the marginal addition will increase the units to 115 and the total costs to $1,425.
The implication is big here. If the auction price can push up the market price from $12 to $15, the increase is 25%, it means the profit of the original 100units will increase by 25% or $300 which is more than enough to cover the costs of the newly additional units or simply speaking it is only just a zero cost to acquire these additional new units.
The auction yesterday was clearing proving of the above fact. Cheung Kong was bidding up the land at a very high price which to the outsider were puzzled why they bought at around $10,000 per sq ft and if taking into accounts of the building costs the sales prices need to be at least 14,000 or above in to order to make a profit which were way above the secondary market-flour is more expensive than bread. But if you can think the logic from the above simple arithmetic, you know the reasons why. While pushing up the auction or market prices, at the same time they were lifting the market prices of their underlying holdings in their books too. It shows the facts that the property developers have grown to the sizes that any simple policies by the Government are no longer easy to have their desirable effects to cool down the property markets. On top of that, if we look into their financials, the property developers are now so strong that can weather any adverse market moves or tough policies put forward by the Government. The ball is now in the court of our Upper Albert Road and wonder there are someone wise and bold enough to counter the balances of these powerful, greedy & fierce giant developers.
