Only three developers have bid for the MTR Corporation's Tai Wai residential project, with most staying away because of the staggering costs.
Total investment needed for the project, including land and construction costs, may amount to nearly HK$30 billion, surveyors say.
The developer would have to cough up about HK$24 billion, while the rest would come from MTR.
Fifteen developers submitted expressions of interest last month for the project, which went out to tender on May 30.
But only Sun Hung Kai Properties, Cheung Kong (Holdings) and Henderson Land put in bids for the tender, which closed yesterday.
Stewart Leung Chi-kin, deputy chairman of Wheelock Properties, told RTHK that it decided not to bid because it did not consider the expected revenue sufficient to cover the project costs.
The government has imposed a land premium levy of HK$12.7 billion, or about HK$4,410 per square foot, for the site. MTR will pay about 30 per cent of the levy while the rest will have to come from the successful bidder.
The developer must hand over the management rights and half the ownership of the 600,000 sq ft shopping mall within the project after it is completed. This clause also dampened developers' interest.
MTR will award the project to the developer offering the best profit-sharing scheme.
The site can be developed into a maximum permitted gross floor area of 2.88 million sq ft. Of that, 2.05 million sq ft can be used to build roughly 2,900 flats, with an average size of about 707 sq ft. As well as a mall, it will also include a college.
The project is one of three large residential sites available for tender in the next month. The other two are the Tsuen Wan TW5 (Bayside) residential project and a site on the harbourfront in North Point.
Vincent Cheung Kiu-cho, national director at real estate broker and consultant Cushman & Wakefield, said the tenders would sap some of the developers' financial firepower. The government yesterday also announced two residential sites - in Sha Tin's Kau To and on Peng Chau - would be put out to tender on July 20 until August 24.
The Kau To site, a luxury project, covers 212,051 sq ft and could yield a maximum gross floor area of 318,076 sq ft. The 55,973 sq ft residential site on Peng Chau would have a maximum floor area of 34,445 sq ft.