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James Tu

Industry players are set to breathe new life into the old residential district following the government's approval of a rail link

The approval of the MTR West Island line last week has set off a potential race among developers to build up their land banks in the district dominated by old residential properties.

The long-awaited, $7 billion, 3km route will have three stations - University, Sai Ying Pun and Kennedy Town.

The project has renewed homeowners' hopes of enjoying capital appreciation. Home prices in the area, on average $4,600 per sqft, are 20 per cent to 30 per cent lower than Island East.

Although the proposed line will not start operation until 2012, major developers are gearing up  to capitalise on growing demand for housing in Western District once the area's accessibility is improved.

They are urging the government to release some of the waterfront sites for sale, such as the abandoned incinerator plant and abattoir in Kennedy Town, and to relocate the Western Wholesale Food Market in Sai Ying Pun to make way for large-scale residential and commercial projects.

Ricky Wong Kwong-yiu,  a sales and marketing director at Wheelock Properties,  said that it would not be easy for developers to assemble a site of more than 100,000 sqft for large-scale residential-commercial development similar to that found in Taikoo Shing because Western District was an old area.

'For example, Tseung Kwan O is a new district with more flexibility in town planning. It will be hard to attract homebuyers from Kowloon to Western District unless the area has large, modern housing estates,' Mr Wong said.

The new line will cut the travelling time of the 200,000 residents in Western District between Sheung Wan and Kennedy Town by at least half to seven minutes from 15 to 25 minutes now.

Mr Wong said that apart from calling for more government sites to be released for sale, Wheelock was monitoring the availability of private sites.

'We are discussing [options] with various owners now,' he said.

The positive news about the MTR project has prompted the group to raise asking prices by up to 10 per cent for its retail project Great Western Plaza on Belcher's Street and for another residential project at 60 Victoria Road.

Shops at Great Western Plaza are on sale now, while the housing project at 60 Victoria Road will go on sale in September.

'The new pricing strategy will reflect the benefits the West Island line will bring to the district,' Mr Wong said.

Wheelock Properties is one of 11 bidders to compete for the Urban Renewal Authority's residential redevelopment incorporating up to 1,000 flats in Sai Ying Pun. The tender closed last Friday.

Dennis Law Sau-yiu,  managing director of private developer Yu Tai Hing,  which often acquires old buildings for redevelopment, said the West Island line  would speed up the redevelopment of the district.

'Nearly half of residential buildings [in Western District] are more than 20 years old and some are even potentially dangerous buildings which were built before the war.'

But he emphasised that the company would not pay aggressive prices to acquire old properties because the new line would take five or six years to complete.

'Developers will not maximise their profit if the projects are released years ahead of the opening of the West Island line,' Mr Law said.

Chartersince Realty International associate director Desmond Poon Chi-ming  said Kowloon Development and Hongkong Land Holdings bought old properties in the district years ago, hoping to benefit from the approval of the line.

'Over the past 10 years, investors believed opening a shopping mall would never be successful in Western District,' he said.

So prices for street-level shops in the district lagged other areas. For instance, a 453 sqft shop in Sai Ying Pun would sell for only $2.4 million or $5,300 per sqft, he said.



Developers all aboard for Western revival