Cheung Kong (Holdings) teamed with Sino Land and K Wah International (Holdings) to win a large residential site in Tsuen Wan with a below-expectation bid of HK$835 million. Their joint bid drew criticisms, with analysts saying yesterday's collaboration had reduced competition and suppressed the price. The market had forecast a range of HK$920 million to HK$1.08 billion for the 275,881 square feet on Route Twisk - the biggest of the three lots auctioned yesterday. By contrast, Sun Hung Kai Properties (SHKP) paid more than expected for a residential lot in To Kwa Wan. The HK$540 million bid being about 10 per cent higher than predictions. Sino Land and K Wah joined forces again to take the third lot, a residential site in Sham Tseng for HK$240 million. The Tsuen Wan site's accommodation value of HK$1,009 per square foot was about 22 per cent down compared to the HK$1,297 per square foot paid in the August auction by Sino and Kerry Properties for an adjacent smaller lot. During yesterday's auction, four out of the six bidders for the Tsuen Wan site belonged to the Cheung Kong-led consortium. They took turns bidding against the only two rivals - Nan Fung Development and Hang Lung Development. Hang Lung put in just one bid - at HK$650 million - while Nan Fung Development, which took the opening bid of HK$620 million and followed through until the penultimate bid, was finally defeated by the consortium. Surpass Property Strategy Consultant managing director Charles Lai said it was unusual to see such a planned bidding strategy. He urged the Government to monitor such practices to ensure the land reserve was not sold off at suppressed prices. However, government auctioneer Alexander Paton said there was no evidence of any collusion between developers during the course of the auction. 'There is nothing illegal in developers getting together to join a consortium to make bids,' he said. He also disagreed that the Tsuen Wan site was sold at lower-than-expected prices, saying the site was very difficult to develop. The price was a reflection of the location and the amount of money needed to spend on site formation, he said. Analysts said it was surprising to see Cheung Kong join with Sino Land and K Wah to buy land. K Wah had led a group of 17 smaller developers complaining about the market being dominated by big players and urging the Government to cut sites into small parcels. Landbase Surveyors director Chan Cheong-kit said developers formed a consortium mainly to reduce investment risks. 'I do not think the consortium has suppressed the price,' he said, adding that construction costs would be higher because there was a slope on the site. Cheung Kong deputy chairman Victor Li Tzar-kuoi said the consortium to bid on the Tsuen Wan lot was formed last week. 'This is the first time the three of us have worked together,' he said. Cheung Kong has a 50 per cent stake in the consortium, while Sino Land and K Wah each have 25 per cent. Sino Land chairman Robert Ng Chee Siong said the consortium plans to spend a total of HK$2.5 billion on the Tsuen Wan development. The bidding was keener for the 29,762 sq ft residential-commercial site in Farm Road, To Kwa Wan. SHKP outbid Henderson Land Development, Nan Fung and K Wah to take the lot. Its HK$540 million bid represents an accommodation value of HK$2,016 per square foot. Sino Land and K Wah went to HK$240 million to defeat Hantec Investment Holdings for the 84,443 sq ft residential lot in Sham Tseng. Meanwhile, SHKP executive director Thomas Chan Kui-yuen said it would spend between HK$800 million and HK$900 million on the To Kwa Wan project. 'It is very rare in these days to have a residential lot in urban area which is over 20,000 sq ft,' he said.
