bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

urlAlias

moreOnThisArticles

sponsorType

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

SCMP Reporter

A special feature of Hong Kong's property landscape is the millions of square feet of agricultural land in the New Territories which the leading developers hold in their investment portfolios.

 Some of this land has been held on the developers' books for a decade or more without so much as a back-hoe or spade touching it.

 Cheung Kong (Holdings) said it had 13 million sq ft of agricultural land in the New Territories at the beginning of this year, including one 8.6 million sq ft plot in Yuen Long which originally was intended to be a golf resort.

 New World Development said it had 15.7 million sq ft of farm land in the New Territories.

 Sung Hung Kai Properties said it had 18 million sq ft of New Territories' agricultural land.

  Henderson Land Development said it had 15 million sq ft of farm land.

 Lehman Brothers' senior property analyst Michael Leary said there was a reason HK developers were willing to keep a lot of land on their books for so long before developing it.

 Agricultural land offers easy profits, but only if it is developed at the right time.

 'New property goes for about $4,600 per sq ft in the New Territories. Sun Hung Kai Properties has close to 20 million sq ft of agricultural land, so at 7.5 times plot ratio, it's worth about $69 billion developed,' Mr Leary said.

 'But they may have bought it for only a few dollars per sq ft 20 years ago,' Vigers' director of valuation Raymond Ho said.

 'You have to remember that the bulk of a local developer's cost is usually sunk into the land, so there's a significant discount when building huge volumes in the New Territories,' Merrill Lynch property analyst Carol Lai said.

 Ms Lai said Cheung Kong's Kingswood Villas in Tin Shui Wai, the biggest private residential project built on farm land in the North District, generated returns of up to 60 per cent for the firm.

 Henderson's Metro City project in Tseung Kwan O reaped 70 per cent returns, she said.

 The mass-residential developers tended to look at places where transport infrastructure would probably be located, Mr Leary said.

 Jones Lang Wootton's research director Tim Bellman said: 'Effectively, the SAR Government's transportation strategy until 2001 is 'Go West' to the New Territories, so that means Yuen Long is benefiting right now.'  Mr Ho said that at Hung Shui Kiu, near Yuen Long, residential prices at Hutchison Whampoa's planned $3 billion light-rail transit station development project might approach $6,000 per sq ft when completed in the next few years.

 By contrast, units at nearby Symphony Garden sold for only $2,700 per sq ft in mid-1996.

 Another advantage for developers who hold farm land where transport links are planned is that they can offer this land for infrastructure use in exchange for land in better locations for property development.

 Rising capital values mean correspondingly high land-use conversion premiums paid to the Government to change the land zoning.

 But it has done little to deter the big players' zeal to develop agricultural land they already hold.

 New World has been the most aggressive this year, revealing that it is to pay $3 billion to $4 billion in land premiums to convert seven agricultural sites totalling 11.3 million sq ft into 2.23 million sq ft of residential land.

 The residential projects proposed for the sites - in Yuen Long, Kam Tin and Sai Kung - will provide almost two million sq ft of residential and commercial space when completed in the next three years.

 Estate agents calculate that with the proper transport infrastructure, prices of flats in the New Territories could reach as high as 80 per cent of the price of a comparable flat in the city. Helping to push up prices is the Government's policy of developing the New Territories into a viable living area for millions of people.

 So far, it has been a good deal for developers to hold on to agricultural land in their land banks, waiting for the right opportunity to reap the rewards.

 But cheap agricultural land may be getting harder to accumulate for future use.

 The Government already has committed itself to transport links in the western New Territories and owners have taken this into account by raising asking prices for land, as developers jostle for position.

 Goodwill Investment (Holdings) senior project manager Kant Tsang said: 'This land was left to the present village owners by their ancestors, so they have no real pressing need to sell it - it's definitely a windfall for them.'  Mr Tsang said that only a few years ago, the villagers did not know anything about real estate, relying on traditional valuation methods for farm land.

 'They'd sell their land based on how many vegetables you could grow on it,' he said.

 'But they're much smarter now, though. When we approach them to buy land for our land bank, sometimes they surprise us by doing all the figures ahead of time for us.'  Property analysts said that despite rising land prices, developers still had their sights set on the New Territories.

 Mr Bellman said that after 2002, the focus of infrastructure development would return to the eastern end of the New Territories.

 The Government is considering building a Sha Tin bypass and Tai Po link road to relieve congestion on the Tolo Highway and to direct traffic through to Route 3. In addition, a further tunnel or bridge crossing is planned for the Lei Yue Mun channel.

 In 2002, the Tseung Kwan O MTR line from Po Lam to Lam Tin will be completed, helping to route transit passengers.

 The city's continuous growth, spiralling property prices and improving infrastructure have combined to push an increasing number of people to live in the New Territories, where housing accommodation is cheaper.

 Given the leading developers' past record of being in the right places at the right times, analysts say you can bet quite confidently that the major property companies have continued to quietly purchase vegetable patches in potential strategic growth areas in the northern part of the SAR.



Developers sit on a fortune in NT farm land