Developers wary over Bayside site

PUBLISHED : Wednesday, 08 August, 2012, 12:00am
UPDATED : Wednesday, 15 August, 2012, 11:11pm


Developers are expected to bid conservatively for the tender of a residential site in Tsuen Wan West, despite the site's location on the waterfront and next to an MTR station.

Fourteen developers which had shown interest in the Bayside residential site were invited to submit bids. The tender will close today.

It is the second time that the 460,699 sq ft site - located above the MTR station - has been released for tender. It was first put up for tender at the end of last year, together with a nearby site now being developed into the Cityside project. The MTR Corp withdrew the site from tender as the offers were too low. The Cityside site was awarded to Chinachem for HK$3,124 per square foot, or about HK$2.6 billion.

'I think developers will bid conservatively because new housing supply will increase significantly in 2015 and interest rates may begin an upward cycle. The investment risk for the winning bidder could therefore be higher,' said Alnwick Chan Chi-hing, the head of valuation and professional services at property consultancy Knight Frank.

Chan expects the site to sell for between HK$7.4 billion and HK$7.8 billion, or HK$3,300 and HK$3,500 per square foot.

Midland Surveyors director Alvin Lam Tsz-pun said developers would be cautious on sites requiring investment cost of more than HK$10 billion, but their offers for smaller sites could be relatively aggressive.

'Investment costs for large sites are too high. Bidders have to face high investment risk. And since there are now more smaller sites for them to select after the government increased land supply, they have become conservative in bidding for large sites,' Lam said.

Vincent Cheung Kiu-cho, the national director for greater China at agency Cushman & Wakefield, said he cut his expectation of the site's likely price from HK$9.07 billion, or HK$4,061 per square foot, to HK$8.38 billion, or HK$3,750 per square foot.

'This is because of the poor response to the tender for the MTR Corp's Tai Wai station residential project,' Cheung said.