Developers join forces in bidding at land auction
Sino Land chairman spotted talking to rival Nan Fung before securing a waterfront site in Tai Po for HK$2.11b
Developers set aside their rivalries and joined forces at a land auction yesterday to snap up two residential sites in Tai Po for HK$5.61 billion. Analysts said the government could have obtained a higher price for the sites.
Sino Land bid a winning HK$2.11 billion for a waterfront site at Pak Shek Kok, Tai Po, after chairman Robert Ng Chee Siong was seen in discussions during the bidding with Nan Fung Development's Donald Choi Wun-hing. Nan Fung dropped out of the bidding at HK$2.1 billion.
The two companies joined hands with K Wah International to acquire a 214,225 sq ft site adjacent to the first site sold, paying HK$3.5 billion. Other developers showed little interest in joining the fray.
'The bidding result was good but it could have been better,' said Alva To, director of research at property agent DTZ Debenham Tie Leung. 'Interest for the second site slowed after they reckoned Sino and Nan Fung had joined forces to win the first site.'
Property consultants said that if the companies had not linked up during bidding on the first site, the second site could have been sold for a much higher price.
Chinachem Group later paid HK$570 million for the third site sold yesterday, a 29,601 sq ft plot in the centre of Tai Po.
The auctioneer, Lands Department assistant director Graham Ross, said the result reflected market demand and strong market sentiment.
The government had no right to stop people talking during the auction unless they interrupted the proceedings, he said.
The Pak Shek Kok plots are adjacent to Tolo Harbour and next to the Hong Kong Science Park.
The price Sino Land paid per square foot of developable gross floor area - the accommodation value - on its site was HK$6,109 per sq ft, a record for such a site in the New Territories and only slightly lower than the prices at which new houses in the area are selling. Property agents said that, for example, buyers were paying between HK$5,500 and HK$6,500 per sq ft for homes in Henderson Land's Beverly Hills luxury project in Tai Po.
Eight developers entered the bidding for the site, among them Chinachem, Hang Lung Properties, New World Development and Wheelock Properties. Amid intense bidding, Sino Land and K Wah International initially appeared to team up against Chinachem and Nan Fung.
K Wah pulled out when the bidding reached HK$2 billion, leaving Sino Land to battle it out with Nan Fung. Sino Land secured the site with the 63rd bid after discussions on and off between Mr Ng and Nan Fung's Mr Choi.
The two companies will develop the site through a 50-50 joint venture, with completion scheduled for 2010.
The second site attracted only four bidders. The winning bid of HK$3.5 billion translated into a price per square foot of developable gross floor area of HK$4,668, some 24 per cent less than the first site and 15 per cent below surveyors' expectations.
Mr Ng said Nan Fung owned 50 per cent of the site and Sino Land and K Wah 25 per cent each. The two sites would be developed into a luxury project with a total construction cost of HK$2 billion, he said.
Knight Frank executive director Alnwick Chan Chi-hing estimated joint development of the sites would cut developers' costs by 10 per cent. He expects the best-situated houses to sell for HK$10,000 per sq ft.
Mr To, of DTZ Debenham Tie Leung, said the slow bidding for the second site was partly a reflection of its quality.
'The first and second sites will create a marriage value if they are developed together. But once the sea view site was sold, developers were not interested in the second one,' Mr To said.