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The Murray Road Car Park located in Admiralty. 25FEB16 SCMP/ Sam Tsang

Henderson pays US$3 billion for world’s costliest land plot at Murray Road in Hong Kong

The developer, owned by Hong Kong’s second-wealthiest family, beat out eight competitors to buy the first piece of prime commercial land offered for sale in Central in two decades.

Henderson Land Development, the property company owned by one of Hong Kong’s wealthiest families, has bought the world’s most expensive commercial land plot in downtown Central, beating out the mainland Chinese developers who had been dominating the city’s real estate purchases in the past year.

Henderson Land will pay a record HK$23.28 billion (US$3 billion) for the government’s Murray Road commercial plot in Central, beating out eight rival bids, according to the Lands Department’s data.

The plot, which can be developed into a commercial building with 465,005 square feet of total gross floor area, translates to HK$50,064 per square foot, way above market expectations and professional valuations of between HK$15.7 billion and HK$22 billion.

“Today’s tender result sets a new benchmark for the local property market,” said Denis Ma, head of research at JLL. “It will be interesting to see how this affects pricing in the property and stock markets.”

The successful bid was Henderson’s first in almost two years, as it and other Hong Kong developers had been priced out by aggressive mainland Chinese companies like HNA, which spent HK$27.2 billion over four months to snatch four parcels of land at the former Kai Tak airport.

A venture of mainland Chinese developers KWG Property Holding and Longfor Properties paid HK$7.23 billion on Tuesday for the latest Kai Tak plot to go on sale, 15 per cent more than analysts’ valuation.

For Murray Road, mainland Chinese bidders were mostly absent, snared by tightened remittance regulations to stem capital flight.
Interior of Murray Road Multi-Storey Carpark Building in Admiralty. Photo: Nora Tam
Henderson plans to develop the site, currently occupied by a five-storey public car park, into “a landmark building” scheduled for completion in 2022, according to a statement by the developer’s vice- chairman Martin Lee Ka-shing, the youngest son of Hong Kong’s second-wealthiest man Lee Shau-kee.

Total investment cost of the project may exceed HK$26 billion inclusive of the land cost. Henderson’s shares closed 0.5 per cent higher at HK$50.20 before the tender result was announced.

“The building will likely attract strong occupier demand both from mainland Chinese firms and multinational corporations,” said CBRE’s head of research Macros Chan.

The record price came even after the Hong Kong Monetary Authority on May 12 ordered banks to cut their loans to developers to 40 per cent of a site’s value, from the previous 50 per cent.

Expectations over the Murray Road plot had already spilled over to surrounding commercial properties, boosting capital values by as much as 11 per cent ever since the government put the site -- the first commercial lot in Central to go on sale in two decades -- up for tender, said Ma.

A grade-A office unit at 9 Queen’s Road in Central sold in April for HK$145.82 million, or a record HK$39,800 per sq ft in transacted office price.

Bids for Murray Road were received from Sun Hung Kai Properties, Nan Fung Development, Cheung Kong Property (Holdings), Wheelock & Company, Chinese Estates Holdings and Hang Lung Properties.

Among mainland developers, bids were received from Shimao Property Holdings of tycoon Hui Wing Mau , as well as Chongqing-based CC Land Holdings. Both the firms are listed on the Hong Kong stock exchange.

This article appeared in the South China Morning Post print edition as: site in central fetches world record price
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