New | Shimao Property plans to invest up to HK$15 billion in a luxury residential project in Kowloon Tong
Shimao Property is the latest mainland Chinese developer to beat local property giants at a government land auction, securing a luxury residential site in Kowloon Tong that will involve a total development cost of as much as HK$15 billion.
It defeated six bidders including Cheung Kong Property, Sun Hung Kai Properties and Henderson Land Development.
The Lands Department said on Tuesday it had awarded the site, which will yield a total gross floor area of 632,385 sq ft, to Shimao for HK$7.02 billion.
"It is our first time to secure a residential site in Hong Kong," a Shimao spokesman said. "We will pour an additional HK$5 billion to HK$8 billion on top of the land cost into this luxury development."
Shimao is known for its luxury developments in Shanghai. In 2009, it sold a villa at Shimao Sheshan Villas in Shanghai for a record 205 million yuan, the most expensive home in mainland China at that time.
Alvin Lam, a director at Midland Surveyors, attributed the high development cost to the complexity of the project.
Apart from the plot offered for tender, he said the 20 hectares surrounding it would also be given to the successful bidder for geographic assessment.
Of the 20 hectares, 12 are inside Lion Rock Country Park, through which stage five of the MacLehose Trail passes.
"It will certainly require higher development cost and longer completion compared with normal projects," he said.
The total investment cost will translate into HK$23,710 per square foot, including a land cost of HK$11,101 per square foot.
Vincent Cheung Kiu-cho, a chartered surveyor, said mainland Chinese developers were getting more aggressive in land acquisition in Hong Kong.
Two weeks ago, mainland Chinese developer Poly Property won a luxury residential site in Tuen Mun for HK$1.73 billion, about 25 per cent above the upper range of market expectations of HK$900 million to HK$1.38 billion.
"They believe the luxury residential market in Hong Kong will be more resilient in a market downturn compared with China," Cheung said.
He said the winning bid for the Kowloon Tong site was in line with his forecast of HK$12,000 per square foot.
The market earlier forecast the site at Yin Ping Road, Tai Wo Ping, could fetch HK$5.9 billion to HK$9 billion.
Lam said luxury flats in the area went for HK$30,000 per square foot and houses could fetch HK$40,000 to HK$70,000 per square foot.
Shimao's preliminary development plan comprises 90,000 sq ft of houses and four, 18-storey residential blocks.
It may provide 20 to 30 houses, with areas ranging from 4,000 sq ft to 5,000 sq ft each.
