Hong Kong Property

Developers make no bids for MTR Corp's Tin Shui Wai homes site

Land premium charge 'too high', say surveyors, as rail firm withdraws residential plot from tendering after developers fail to make any offers

PUBLISHED : Thursday, 21 February, 2013, 12:00am
UPDATED : Thursday, 21 February, 2013, 6:07am

MTR Corp has withdrawn its residential site in Tin Shui Wai from tendering, as no developer submitted a bid for the site by the deadline yesterday.

Surveyors said the land premium charged by the Lands Department was too high.

Vincent Cheung Kiu-cho, the national director for greater China at property consultancy Cushman & Wakefield, said: "The winning bidder has to pay a land premium of nearly HK$2,735 per square foot for the site. If they offered 5 per cent in profit sharing to MTR Corp, the land cost of the site would increase to HK$3,085 per square foot.

"The site is close to a light-rail stop, not an MTR station. The location isn't good. As the investment cost is high and the site is located in Tin Shui Wai, the developer would have to be able to bear a higher risk."

The average selling price of the flats would have to reach HK$8,400 per square foot of saleable area to achieve a 20 per cent profit margin, Cheung said.

However, prices of flats in the nearby housing estates Kingswood Villas and Central Park Towers were just HK$5,500 and HK$6,400 per square foot, said Ming Wan, a manager at Centaline Property Agency.

Alvin Lam, a director at Midland Surveyors, said: "The government has increased land supply. There will be more luxury residential sites released for sale in the market. Developers have more choices and would rather invest in attractive projects."

Sixteen developers, including Cheung Kong, Sun Hung Kai Properties, Henderson Land Development, Sino Land, Wheelock Properties, Lai Sun Development, Asia Standard International, Kowloon Development and China Overseas Land & Investment, submitted expressions of interest for the site last month. MTR invited the developers to join the tender.

SHKP told the media yesterday morning it had submitted a bid. However, MTR announced in the afternoon it had not received any bids for the site.

Cheung Kong executive director Justin Chiu Kwok-hung said the land premium was too expensive.

SHKP said the company sent an opinion letter to MTR about the project, but it declined to disclose the content.

The 196,248 sq ft site near the Tin Wing light-rail stop could provide a total gross floor area of about 979,500 sq ft. More than 99 per cent of the gross floor area is designated for building about 1,600 flats, while the remaining floor area would be used for shopping outlets.

The successful bidder would have been required to pay a land premium of nearly HK$2.69 billion. It would also have needed to pay MTR about HK$400 million for site formation works.