HNA wins second site in Kai Tak for HK$5.41 billion, sets new record
The Chinese conglomerate secured the residential plot at the site of Hong Kong’s former airport for a record HK$13,600 per square foot
Chinese conglomerate HNA Holding Group has outbid 20 rivals to win its second residential site in Kai Tak for a record HK$13,600 per square foot.
HNA secured the parcel of land, known as Kai Tak Area 1L Site 3, with a bid of HK$5.41 billion, 24 per cent to 38 per cent higher than the market expectation of HK$2.98 billion to HK$4.38 billion, or HK$7,500 to HK$11,000 per square feet.
The HK$13,600 per square foot price tag is HK$100 higher than the previous record set by HNA on November 2 when it bought an adjacent plot - Kai Tak Area 1K Site 3 - for HK$8.84 billion.
The big premium reflects the developer’s confidence that the area will be transformed into Hong Kong’s second core business district
The unexpectedly high bid came despite a weaker outlook for developers in the wake of the interest rate rise in the US and the introduction by mainland authorities of tighter curbs on capital outflow.
Thomas Lam, senior director at Knight Frank, expects the total investment cost for the latest site will be more than HK$10 billion.
“The big premium reflects the developer’s confidence that the area will be transformed into Hong Kong’s second core business district in the future,” he said.
Vincent Cheung Kiu-cho, executive director of valuation and advisory services for Asia at Colliers International, said the bid submitted by HNA raised concerns that the group intends to support the land price at Kai Tak after securing the first plot for such a jaw-dropping sum.
“If this adjacent site had sold for a lower price, it may have complicated the group’s plan to raise financing from banks after seeing land prices drop in such a short period of time,” he said.