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Chloe Lai

Sandy Li

$3.75b offer triggers sale that is expected to set benchmark for cultural hub land

Two adjacent residential sites in West Kowloon worth more than $3.75 billion will be auctioned next month.

The sale on September 27 already represents a number of milestones - the first residential land auction since last October, the first land auction this financial year and the first land sale since the application list system was modified on June 21.

Market observers say it will provide a timely reference for the land value of the 40-hectare West Kowloon Cultural District site as the government prepares to announce plans next month for how to get the controversial project moving.

The Lands Department said the sale of the sites near the Olympic MTR station had been triggered by the same property developer. They are Lot 11167 at the junction of Hoi Wang Road and Hoi Ting Road and Lot 11168 on Hoi Ting Road.

Industry players are optimistic the sale prices of the two will be 30 per cent higher than the developer's proposed prices and provide a stimulus to the property market.

Midland Surveyors associate director Alvin Lam Tsz-pun estimated the government could reap as much as $2.51 billion, or $4,200 per sq ft, for the site at Hoi Ting Road. The proposed price is $2.09 billion.

He estimated the smaller lot at the junction of Hoi Wang Road and Hoi Ting Road at $2.15 billion, or $4,300 per sq ft. The proposed price for this piece of land is $1.66 billion.

The two sites will provide up to 1,500 residential flats to be completed in 2007, likely to sell at $7,000 to $7,300 per sq ft, surveyors said. This compares with current prices in the area of $4,000 to $6,000 per sq ft.

'Response for the land auction is going to be overwhelming, given that it has been 10 months since the last residential site was launched in the market,' Mr Lam said. 'The two sites can be built into a single mass housing estate if they can be successfully bought by one developer.'

Centaline Property Agency chairman Shih Wing-ching said the auction results would serve as a reference for the value of the West Kowloon Cultural District.

'The cultural hub, of course, will be more expensive,' he said.

The proposed prices will be the opening bids of the September auction. The Lands Department declined to comment on whether the proposed prices had reached the government's asking prices or just 80 per cent of them, which is permitted under the modified application system.

Under the changes, a developer that triggers an auction must join the bidding but is not obligated to buy the site if its offer fails to satisfy the government.

Lands officials will estimate the prices hours before the auction and not sell the land until the bidding prices reach or pass the estimates.

Sino Land and Henderson Land, which have residential projects in the neighbourhood, denied they were the auction applicants.

Sun Hung Kai, which is also developing a residential project in the area, and Cheung Kong (Holdings) declined to comment.

The government collected more than $20 billion from the sale of six sites last financial year - far more than its forecast of $4.56 billion and enough to help tip the budget deficit into surplus. In the March budget, it expected $31.9 billion from land premiums this fiscal year.

Vigers Appraisal and Consulting executive director Tony Chan Tung-ngok said the auction proved the modified land application list system was working.



Two West Kowloon sites set for auction