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SCMP Reporter

There are promising signs of reviving interest in a once abandoned industrial zone

Kowloon Bay, an industrial neighbourhood that has been stagnant for years, has popped back into the property picture: a 50,752 sq ft  commercial site in the area will be coming up for sale by public auction on February 22.

Surveyors said the selling price would set the benchmark in land premiums required to develop  industrial sites in the area as office buildings.

The property, situated at the junction of Wang Chiu Road  and Sheung Yuet Road, has a minimum accommodation value of $998 per sq ft.

Market watchers believe the sale has been prompted by the bullish outlook in the office market. They cited Enterprise Square Three, the Kowloon Bay development by Kerry Properties, which has seen a price increase of more than 50 per cent since its launch in February last year.

According to property agents in the area, medium-floor office space in the Enterprise Square Three tower sold to  leading names such as Esprit  and BCBG  for about $2,000 per sq ft in February last year is now going for $3,000 to $3,500 per sq ft in the secondary market.

Jones Lang LaSalle national director Gregory Ku Ka-ho said whoever bought the upcoming Kowloon site  could expect keen competition from revived commercial projects in the area.

'At least 1.3 million sq ft of new office space supply  will emerge in 2006 and 2007,' Mr Ku said.

He added that the successful bidder should seriously consider developing the site into a hotel in view of the abundance of anticipated office space.

About 700,000 sq ft of new office supply will be generated at a 57,100 sq ft site on Wang Tai Road and Wang Yuen Street, bought through government tender for $361 million in 1998 by Glorious Sun.

Enterprise Square Five, an upcoming Kerry Properties development in Kowloon Bay scheduled for completion in 2006, is expected to generate a million sq ft of retail space and about 600,000 sq ft of office space.

Mr Ku said  there would be more potential new office supply from an industrial site on 1 Sheung Yee Road, acquired by Manhattan Realty for $128 million in 2000. It is understood  that the developer is liaising with the government on the land premium  for converting the property into an office development.

The total floor area is about 700,000 sq ft.

Glorious Sun and Manhattan Realty, which bought their respective sites between 1998 and 2000, have not yet completed construction work.

It is believed that the developers would rather pay the government penalty for failing to meet the construction deadlines than suffer high vacancies in a slow market.

In 2001, the government made an attempt to revamp Kowloon Bay by converting  22 hectares of industrial land for business use, but the plan failed to spark interest among developers worried about the ups and downs of the Hong Kong property market.

While the upcoming land sale and the turnaround in the property sector may bring new hope to the district, surveyors said there was still an element of uncertainty in the area.

'It is hard to say if the demand for office space in Kowloon can be sustained,' said Mr Ku of Jones Lang LaSalle.



Sale of vacant site may help change face of Kowloon Bay