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  • Oct 1, 2014
  • Updated: 4:13am

Great Eagle Holdings

Great Eagle Holdings is a property company listed and based in Hong Kong. Its operations span property investment and hotels, and it operates in Hong Kong, North America, Europe and the Asia Pacific. As of 2012, its hotel portfolio comprised 13 properties with more than 6,000 rooms, including 10 hotels branded under the Langham name in Hong Kong, Shanghai, London, Boston, Los Angeles, Melbourne and Auckland, Eaton Hotels in Hong Kong and Shanghai; and the Delta Chelsea Hotel in Toronto.

PropertyHong Kong & China
LAND SALES

Great Eagle's record low winning bid snags Tai Po waterfront site

HK$2.4b deal a sign government will settle for lower land prices to increase housing

PUBLISHED : Thursday, 29 May, 2014, 3:43am
UPDATED : Thursday, 29 May, 2014, 3:43am
 

A record low winning bid for a residential site in Tai Po surprised the market yesterday as it became evident the government is open to settle for cheaper land prices as it seeks to increase housing supply.

Mid-tier commercial developer Great Eagle Holdings won the tender for a waterfront site in Pak Shek Kok, near Science Park, for HK$2.412 billion, or HK$3,300 per square foot. The bid was at least 17 per cent lower than what the market had been expecting. It's also nearly half the price for which nearby waterfront sites exchanged hands in 2007.

In March, an adjacent site was withdrawn from tender as the offers failed to meet the government's reserve price.

"It surprised me. I didn't expect the final price would be less than HK$4,000 per sq ft," said Vincent Cheung Kiu-cho, the national director of Greater China for the consultant Cushman & Wakefield.

"It shows the government's policy has changed. Had they continued with the high land price policy, they would have been unable to sell the site, failing to meet the target of increasing housing supply."

He also believed that the offers for the site were low because there were plenty of new units in the area and sales had been sluggish.

James Cheung, a director at Centaline Surveyors, said the government should review its land sale programme for the remaining sites in Pak Shek Kok.

"There is plenty of new housing supply in the area, and there are several sites ready for sale. The record low price shows developers are worried about property sales in the area. If the government continues to release more sites in the area in the short term, it would get very low prices. It should delay selling the remaining sites."

Since the rest of the sites don't have a sea view, he estimated they would fetch about HK$2,800 per sq ft if sold in the near future.

The last time Great Eagle bought a land parcel in Hong Kong was in 1989. It bought a commercial site in Central and developed it into what became Citibank Tower.

With its latest acquisition, the developer plans to invest HK$7 billion to develop a luxury residential project with 500 to 700 flats.

The 208,822 sq ft site could yield gross floor area of up to 730,876 sq ft.

Meanwhile, a residential site in Kai Tak was sold to Wheelock Properties for HK$2.52 billion, or HK$6,101 per sq ft, higher than market expectations.

The site covers an area of 82,603 sq ft and could accommodate up to 630 flats.

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scmpcoolguy
Great Eagle's investment philosophy is they buy at the very low end of market and sell high. They bought the site at 3 Garden Road in July 1989 at around HK$2.75B with an AV of just HK$2,100 per sq.ft. (assuming the long completed Citibank Plaza has a total GFA of approx. 1.3 Million sq.ft. above ground). Assuming the construction cost back in the late 80s and early 90s to be in the region of HK$1,400 per sq.ft. for International Grade A office bldg., the total construction cost will amount to another HK$1.82 Billion. Adding professional fees of 8% of construction costs and bank interest during construction to be another HK$400 Million,the gross development cost would add up to around HK$5.0 Billion. Based on the last transaction price of around HK$26,000 per sq.ft. which was the sum GE paid the HK Govt to purchase the 5 low floors in Citibank Tower, the Gross development Value nowadays is around HK$33.8 Billion. GE owns 51% of Citibank Plaza with the remaining 49% owned by Champion Reit, the 51% of the net worth of Citibank Plaza at today's market prices is around HK$14.688 Billion. This just shows how some old time and shrewd HK developers make their big money via buying low and selling high... GE could well be repeating their proven investment strategy here in Pak Shek Kok....
 
 
 
 
 

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