HK companies gear up for Shenzhen land sale
Analysts expect to see strong interest from Hong Kong developers in three residential lots worth an estimated 2.3 billion yuan (about HK$2.15 billion) at tomorrow's public land auction in Shenzhen.
They said the participation of Hong Kong players would have significant implications for the SAR's housing market as many developers were expanding their investments in the mainland.
The price of the three lots, located near Hong Kong's Lok Ma Chau border crossing, was also expected to influence property prices in the northern New Territories in the wake of growing concern over the proposed round-the-clock border opening between the SAR and Shenzhen.
Surveyors estimated the Shenzhen lots could fetch a total of about 2.2 billion yuan to 2.3 billion yuan, representing about 2,600 yuan to 3,200 yuan per square metre.
Estate agents said flats in Shenzhen were selling for 5,000 yuan to 6,000 yuan per sq metre.
They expected that properties built on the lots could sell at a higher price of about 8,200 yuan to 8,500 yuan per sq metre in three years due to their waterfront location.
Major players, including Sun Hung Kai Properties, Sino Land, Kerry Properties and New World Development, have expressed strong interest in the lots.
Sino Land has emerged as the front bidder for the lots after recently unveiling its expansion plan in the mainland property market.
Despite developers' keen interest, Dao Heng Securities property analyst Eric Yuen said developers would bear additional risks in Shenzhen such as the quality control of construction work.
'Some major players may afford to set up a construction team in Shenzhen to supervise the quality of the project once they win the three lots,' Mr Yuen said.
'But in doing so, they would have to pay extra effort in project management and negotiation with local government officials for the possible complicated legal procedures.'
Michael Choi, chairman of Land Power International Holdings, which specialises in property sales in the mainland, said Hong Kong developers would meet strong competition from local developers at the auction.
He said it was a good opportunity for mainland developers to add to their land reserves in Shenzhen. Many mainland developers, such as Vanke Shenzhen Real Estate and Goldfield Industries, had expressed strong interest in the three lots, Mr Choi said.
The lots, measuring a total of 23.7 hectares, are situated on newly reclaimed land at Shenzhen Bay and are located near Shenzhen's tourist theme parks - Windows of the World, Splendid China and China Folk Culture Village.
One lot comprises about 75,100 sq metres, while the other two each measure 81,920 sq metres and 80,732 sq metres. Together, they could provide a total floor area of 772,000 sq metres with proposed plot ratios ranging from 3.1 times to 3.4 times.
They are the first parcel of land for sale from the 290 ha of reclaimed land which the Shenzhen government plans to develop into a massive residential-commercial project.
Up to 2.4 million sq metres of floor area would be developed for residential use under present planning.
Interested bidders are required to pay a deposit of 50 million yuan.
Midland Surveyors said there would be pressure on some medium mainland developers because of the huge deposit involved.
According to the land sale document, the sale is supposed to be completed within five days of the auction, possibly stretching the resources of smaller players.
However, SK Pang Surveyors managing director Pang Shiu-kee said developers would remain cautious in bidding for the lots because of the possible huge costs involved in the investment, especially given the scale of the development.
He said some developers would rather concentrate on their Hong Kong projects instead of exploring the mainland market.
'Flats in Hong Kong still retain some premium compared with the generally cheap properties in Shenzhen,' Mr Pang said.
