Henderson buys prime site

PUBLISHED : Tuesday, 09 August, 2005, 12:00am
UPDATED : Tuesday, 09 August, 2005, 12:00am

Firm will spend $2.5b to convert North Point plot into sea-view development

Henderson Land Development plans to invest $2.5 billion redeveloping a North Point industrial parcel facing the harbour, after acquiring the site through a private tender last week.

'We are thinking of building a residential, hotel or office development. But no final decision has been made,' vice-chairman Colin Lam Ko-yin said last night.

Mr Lam said the company paid $620 million for the 70,000 square feet site on King Wah Road, in a private tender.

'We plan to knock down the industrial block and re-build a new development consisting of total gross floor area of 450,000 sqft,' Mr Lam said. 'This is a valuable site, which has a full sea view.'

Henderson last week outbid rivals including Cheung Kong (Holdings) to win the site, owned and occupied by Asia Cold Storage. The site was approved for office use in 1996 but Asia Cold Storage recently applied to convert it to residential use to enhance its market value. The Town Planning Board will discuss the application next month.

The site is next to Cheung Kong's Fook Lee Godown site, on which the developer plans a hotel project. Earlier this year, Cheung Kong paid the government a land premium of about $950 million, or $2,043 per square foot, to convert the industrial site into hotel use.

Mr Lam said assuming that the government would charge the company a land premium of about $2,100 per square foot - a similar price paid by Cheung Kong for its godown site - the redevelopment cost, including land and construction, was estimated at below $5,000 per square foot, or $2.5 billion.

But analysts said Henderson would be asked to pay a higher land premium as the property market had risen since March.

The Asia Cold Storage site is also next to a 3-1/2 acre residential-commercial Oil Street lot that was included in the latest land application list.

Commenting on renewed calls for the resumption of regular auctions to provide steady land supply, Mr Lam said the auction system was not the only way to increase land banks. Converting industrial sites or agricultural land into residential or commercial use was also an efficient way to replenish land banks, he said.

Under the original application-list system, a site is put up for auction only after a developer undertakes to submit a bid that meets an undisclosed minimum reserve price set by the government.

In a move to speed up land sales, the government modified the system in June so that developers need bid only 80 per cent of the reserve price to trigger an auction.