Hong Kong Property

Hong Kong’s first grade-A office site in Central in 20 years to be offered for sale

Prime office plot is one of the 40 government sites due to be offered for tender from April

PUBLISHED : Thursday, 25 February, 2016, 10:11pm
UPDATED : Friday, 26 February, 2016, 1:28am

The first grade-A office site in Central to be offered for tender in 20 years is expected to fetch HK$9 billion, making it most valuable commercial site in the government’s land sale programme for the fiscal year to March 2017.

The prime office plot is one of the 40 government sites due to be offered for tender from April. Twenty-nine are residential plots with the potential to provide 19,200 new private flats.

Centaline Surveyors estimated the seven residential sites scheduled for tender between April and June could generate a total of HK$15 billion.

“This development site (in Central) will attract strong interest from the city’s developer community given that it is the first commercial development site in Central since 1996,” said Denis Ma, head of research at JLL.

One and Two International Finance Centre (IFC) above Hong Kong Station were tendered by MTR Corp in 1996.

Charles Chan, Savills’ managing director for valuation and professional, estimated the commercial site in Central could fetch HK$20,000 per square foot.

“It will certainly draw lots of interest,” he said.

This grade-A building is equivalent to about one-third of One IFC
Thomas Lam, Knight Frank

The site could yield a gross floor area of about 450,996 sq ft and generate bids of more than HK$9 billion.

Taking construction and interest expenses into account, the total investment cost could be nearly HK$14 billion.

Thomas Lam, head of valuation and consultants at Knight Frank, said the site could be developed into a 30-storey grade-A office, with each floor of about 16,000 sq ft.

“This grade-A building is equivalent to about one-third of One IFC,” he said.

There are eight commercial sites in next fiscal year’s land sale programme, with the potential to supply of 5.8 million sq ft, and three hotel sites that could be used to build 2,100 rooms.

Secretary for Development Paul Chan Mo-po said most commercial sites would be offered for tender in the second half of the fiscal year.

He said the 19,200 flats that could be built on the new residential land would be a record since 2010.

Of the 40 sites to be released for tender next fiscal year, eight residential sites, two hotel plots and a commercial site are located in the Kai Tak area, making it the largest source of land supply.

Paul Chansaid the eight residential sites in the Kai Tak area would be enough to build 6,000 new private flats.

Ma said it would be the largest supply of new private flats in an urban area in the past 10 years.

“Most of the new supply entering the market in recent years has been focused in the New Territories, such as Tseung Kwan O,” he said.

Despite the residential market downturn, the government will offer 16 large sites that could each be used to build more than 500 flats, nine plots designated for up to 500 flats and four for 99 units.

Paul Chan expressed confidence in being able to sell all sites despite the withdrawal of two residential land sales in the past three months due to the bids being below the undisclosed reserve prices set by the government.

“The unsuccessful bids in the past few months are bound to happen when market is softening,” he said.

Together with land supply from railway property schemes sufficient for a potential 8,031 flats and 480 flats to be supplied from tenders by the Urban Renewal Authority and from the private market, total housing supply for the year to March 2017 would be raised to 29,000 flats.

“These sites should receive support from the market,” he said.