The MTR Corporation has invited 15 short-listed developers to submit tender proposals for a 521,102 sq ft residential site above the Tai Wai station in Che Kung Miu Road by noon on Friday.

The site can be developed into a maximum permitted gross floor area of 2.88 million sq ft. Of that, 2.05 million sq ft can be used to build roughly 2,900 flats with an average size of about 707 sq ft.

As such, the site can be developed into eight residential towers of 40 to 52 storeys each. It also allows for the development of commercial space exceeding 667,000 sq ft and some space for a tertiary college.

The winning bidder will have to pay part of the land premium, set at HK$12.7 billion by the government. The MTR Corp is committed to paying HK$4 billion, or a third of it.

Excluding the area for a school, the land price is about HK$4,673 per sq ft. The bidders will be chosen based on factors including the percentage share of profits from the project which they will allocate to the MTR Corp.

Midland's Lam said: 'One attractive point of this project is that it comes with more than 600,000 sq ft of commercial space, which can be turned into a sizeable shopping mall. Tai Wai has a huge population but there isn't a big shopping mall in the town centre, except the very crowded New Town Plaza in Sha Tin.'

Under the tender contract, the MTR Corp will retain a 50 per cent share of the commercial space.

Strong sales of flats at New World Development's 'The Riverpark' in the last two weeks showed there was demand for residential properties in the district, Lam said.

Riverpark is located above Che Kung Temple MTR station, a stop away from Tai Wai station.

The winning bidder would need to offer the MTR Corp 5 to 10 per cent of profits from the project to secure the site, said Vincent Cheung Kiu-cho, national director of valuation advisory services at property consultancy Cushman & Wakefield.

Cheung said the winning bidder of the Tai Wai site would have to price flats at HK$10,000 sq ft at least, given that profits would have to be shared with the MTR Corp.

That is if the bidder hopes to achieve profit margins similar to those generated on residential sites in Tseung Kwan O, which were transacted at more than HK$4,000 per sq ft recently, as well as new projects in the area that were transacted at above HK$8,000 per sq ft.

The total investment amount for the Tai Wai project, including land and construction prices, could amount to nearly HK$30 billion. It could be as much as HK$20 billion for the North Point waterfront project.

'This means developers will have to draw up to HK$50 billion from the market at the same time to finance the two projects. Can they still be able to finance the projects with low lending costs?' Cheung asked.

He also said that it might affect the bidding for the North Point site, which follows within two weeks of the Tai Wai site bidding.

The winning bid for the former North Point estate site in Java Road and Tin Chiu Street, now open for tender until July 6, would be between HK$8.46 billion and HK$10 billion, according to market estimates.

The 251,875 sq ft site can yield a maximum gross floor area of 577,806 sq ft, and the developer will be required to build at least 700 flats, suggesting an average size per flat of about 825 sq ft.