Kerry Properties lands site for HK$3.98 billion

PUBLISHED : Wednesday, 01 August, 2007, 12:00am
UPDATED : Wednesday, 01 August, 2007, 12:00am

Green protests prompt lower than expected auction price

A large residential site in Wong Tai Sin sold for a lower than expected price at yesterday's government land auction amid increasing concern that moves by environmental groups to block high-rise development will limit growth in the property market.

The site, the former Wong Tai Sin Police Quarters, was sold to Kerry Properties for HK$3.98 billion and could provide a residential area of 767,096 square feet and commercial space of 153,420 sqft.

Surveyors had expected the 102,280 sqft site to fetch at least HK$4.1 billion to HK$5 billion, or HK$4,454 per square foot to HK$5,431 per square foot.

Environmental group Green Sense protested outside the Queen Elizabeth Stadium in Wan Chai before the auction began, calling for curbs in high-rise development.

Bidding turned cautious after the group and legislator 'Long Hair' Leung Kwok-hung marched into the auction hall in an attempt to halt the sale. Only five developers were competing for the site.

Before the bidding, Mr Leung and a group of supporters chanted: 'People have no space for breathing' and 'collusion between officials and business' as they were escorted away from the auction block.

Roy Tam, president of Green Sense, also protested to a representative of Kerry Properties after the site was sold to the developer.

Nicholas Brooke, chairman of Professional Property Services, said the site sold at the bottom end of expectations, due to a combination of the environmental protests and slow growth in mass residential prices.

The outcome demonstrated that developers have become more cautious with potential delays to projects because of increasing pressure from environmentalists, he said.

Last month, Green Sense helped a Sham Shui Po resident take the government to court in a failed attempt to prevent a development site in West Kowloon from creating a 'wall effect', blocking ventilation and light.

Developers are also becoming more conservative in making bids owing to the laggard performance of the mass residential market.

'Mass residential prices are not increasing as fast as developers expected,' Mr Brooke said.

After an exchange of 26 bids with Sino Land, New World Development and Chinachem Group, the site went to Kerry Properties for HK$4,323 per square foot - 32.7 per cent higher than the opening bid of HK$3 billion.

It is the first site Kerry Properties has acquired at a land auction for seven years, since teaming up with Sino Land to buy a residential site in Tsuen Wan in 2000. Shares in Kerry Properties jumped 3.71 per cent to close at HK$57.30 yesterday.

Chu Ip-pui, executive director of Kerry Real Estate Agency, said the price for the site was reasonable. The company plans to invest HK$5.5 billion to develop a mid-market residential project, with a target price of HK$8,000 per square foot.

The project will comprise four or five residential buildings with 1,000 units of between 800 and 1,000 sqft each.

Mr Chu said there must be some distance between the buildings, to allay fears of a wall effect on air flow.

After the sale, auctioneer and Lands Department assistant director James Merritt said that the site sale had met expectations.

Kerry Properties is part of Kerry Group, the largest shareholder in the SCMP Group, which publishes the South China Morning Post.