Price of waterfront land in Hong Kong’s Cheung Sha Wan could reach record as 11 firms bid
After the price of an adjacent plot beats expectations, some analysts see the possibility of a fresh high in a city already among the world’s costliest to buy a home
A total of 11 Hong Kong and mainland Chinese developers have submitted bids for waterfront housing land in Hong Kong’s Cheung Sha Wan area, according to the city’s Lands Department, looking to buy a site analysts said had the potential to become the most expensive residential land in the city.
Sun Hung Kai Properties, New World Development, Kerry Properties, Chinachem Group, Henderson Land Development and CK Assets Holding submitted separate bids for the site when the tender closed at noon on Friday, while China Overseas, Logan Property and Shimao Properties were among the mainland Chinese players joining the fray.
The value of the land has the potential to break the record set by a waterfront housing site on Lee Nam Road in the southern area of Ap Lei Chau, according to Chan Ka-ho, assistant manager of Chinachem Group’s treasury department. That site sold for HK$16.86 billion (US$2.16 billion) in February to a joint venture between Logan Property and fellow mainland Chinese developer KWG Property.
“Located near the Nam Cheong MTR station, the [Cheung Sha Wan] land is a rare plot and is already set to be the most expensive waterfront housing land this quarter,” said Alvin Lam, director of Midland Surveyors. He noted that the tender value of an adjacent plot of land earmarked for a hotel development had been sold to Sun Hung Kai for HK$5 billion last month, higher than market estimates.
The estimated potential housing supply of the site is more than 1,200 units, with a total gross floor area of 986,789 square feet. The winning developer would have to allocate more than 38,000 square feet for public space on ground level and build a waterfront promenade for the government under the terms of the sale.
“Cheung Sha Wan is transforming, with a number of office and commercial developments becoming available in the future,” said Thomas Lam, head of valuation and consultancy at Knight Frank.
“Coupled with plentiful neighbouring amenities such as retail shops, the land could be designed as a mixed-use waterfront luxury development,” he said, estimating the price to range from HK$15,000 to HK$18,000 per square foot, for a total of HK$14.8 billion to HK$17.8 billion.
However he noted that there was a possibility the final price for the plot could be lower, in part because of Beijing’s restrictions on the export of capital imposed on mainland Chinese firms, and by the numerous public housing estates in the Cheung Sha Wan area.
The estimated total investment cost for the site could be HK$20 billion, and a winning developer would need to price flats at HK$30,000 per square foot to have a reasonable profit, Lam said. That would be well above the average price of HK$20,000 per square foot for urban developments.
Colliers International meanwhile believed there was good chance that Sun Hung Kai Properties would submit a higher bid for the land after winning the adjacent hotel site. Colliers has revised up its estimate of the value of the site by 35 per cent to HK$14.8 billion.