Prime site to draw fierce bidding
Big developers are expected to bid up to HK$10 billion for the site of the former North Point Estate.
Surveyors have put the value of the prime commercial and residential site on the waterfront at North Point at between HK$7.21 billion and HK$10 billion, or between HK$8,000 and HK$11,103 per sq ft.
Bids for the site, part of which is used for a bus terminus, will be unsealed on Friday.
The 251,875 sq ft site is behind the North Point Ferry Pier and can be developed into a project with a maximum residential floor area of 577,812 square feet. Including commercial space of 322,866 square feet, it could yield a total gross floor area of 900,678 square feet.
As it is located on the waterfront, there is a height restriction of 80 metres (about 22 storeys) on the buildings that may be developed on the site.
Under the land lease, the site also has to provide at least 700 flats. Despite this requirement - a condition not welcomed by developers, as it restricts their freedom to build larger flats - Vincent Cheung Kiu-cho, national director for Greater China at valuers Cushman & Wakefield, believes the auction will be keenly contested.
'The developer could build small flats sized from 600 to 700 square feet, as well as larger apartments from 900 to 1,100 square feet - and demand for the larger apartments on Hong Kong Island is very strong,' he said.
Cheung therefore expects strong interest in the site from developers, given its location on the Hong Kong Island waterfront and proximity to North Point MTR station.
'Most of the floor area is available for residential development. Only a small area is for commercial development, which is useful for long-term investment. That means the winning bidder could get a faster payback by selling the flats,' said Cheung.
'The Oil Street site in North Point, which was released for tender last year, called for a higher proportion of commercial development and the payback period for the winning bidder (Cheung Kong) was therefore longer. It may take them five to 10 years to break even and begin generating a profit,' he said.
Cheung estimates the site North Point Estate site is worth HK$8.46 billion or HK$9,391 per square foot.
However, he believes bidding for a residential site at Tai Wai MTR station - which closes on June 22 - may be more aggressive.
'North Point is a mature district. There are no new factors to consider, such as new infrastructure development, that will benefit the district.
'But the site in Tai Wai will benefit from the construction of the Sha Tin to Central MTR link, so it offers a higher upside potential for flat prices compared with the North Point flats.
'The total land price for the North Point site will also be higher, which means the winning bidder has to take on a higher investment risk.'
The rail line is scheduled for completion in phases between 2018 and 2020.
Alnwick Chan Chi-hing, head of valuation and professional services at property consultancy Knight Frank, believes the site is worth HK$7.21 billion or HK$8,000 per square foot.
Since the winning bidder will need to spend more than HK$10 billion on the land and on construction, Chan believed there will be no more than five bidders for the site.
Alvin Lam Tsz-pun, a director at Midland Surveyors, believes the site is worth around HK$10 billion, or HK$11,103 per square foot, and expects flats there to sell for HK$15,000 to HK$20,000 per square foot.
The average of three surveyors' estimates, in Hong Kong dollars, of what the North Point site will fetch