First site for small to medium-sized flats could fetch HK$2b

Hong Kong's first site earmarked for small or medium-sized flats was put up for sale yesterday.

Developers have until February 18 to bid for the site in Yuen Long, at the junction of Yuen Long On Lok Road and Tai Kiu Road. The site covers 132,828 sq ft and could generate a total gross floor area of 664,139 sq ft.

According to the tender document, the developer will be required to build not less than 960 flats, of which 800 must be between 377 sq ft and 431 sq ft in saleable area and the remainder between 431 sq ft and 646 sq ft in saleable area.

Surveyors believe the Yuen Long site can fetch HK$2 billion, or HK$3,000 per sq ft. Such a price would reflect developers' new-found caution in the wake of the government's new rules on floor area and its recent steps to rein in property price rises.

'Developers will be unlikely to submit aggressive bids given that it is the first site put on sale with restrictions for small flats,' said Victor Lai, managing director at Centaline Surveyors. 'They don't know what the sale response will be for flats without a grand lobby and luxurious recreation facilities.'

Taking into account construction costs and interest expenses, he estimates the winning bidder or bidders will have to sell the flats for HK$5,000 per sq ft to generate a reasonable profit. That implies the development will be dominated by flats costing HK$2.5 million to HK$3 million each.

Midland Surveyors director Alvin Lam noted that flats at Yoho Midtown in Yuen Long were selling for HK$5,800 per square foot in the secondary market and that flats at nearby New Yuen Long Centre were selling for HK$4,888 per square foot.