Lump-sum rail site bids to boost flat supply

PUBLISHED : Wednesday, 06 July, 2011, 12:00am
UPDATED : Wednesday, 06 July, 2011, 12:00am


Bidders for West Rail sites will no longer have to negotiate separately with the government over land premiums.

The change, approved by the chief executive and Executive Council yesterday, is expected to expedite land and flat supplies.

At present, developers who bid for sites along the 34-kilometre railway from Hung Hom to Tuen Mun must stump up the land price and then negotiate with the government over the market-value land premium.

Under the new scheme, bidders will propose an upfront lump-sum cash payment, including the premium when submitting a tender.

'For example, previously, a developer that won a site with a HK$900 million bid would then have to discuss with the Lands Department the amount of land premium - a process that can take several years - and could end up with an agreement to pay HK$8 billion,' Institute of Surveyors spokesman Dr Lawrence Poon Wing-cheung said. 'But now, developers can submit bids of HK$8.9 million or HK$9.9 billion - which has calculated the land premium. This is absolutely a good thing ... as it can expedite the land supply and shorten the development time.'

Poon said the new arrangement could also make the process more competitive, because there were times when the winning bidder tried to bargain for the lowest land premium possible which might be lower than the market price.

The winning bidder will also have to give the relevant West Rail subsidiary a profit share of 5 per cent.