Recent land sales have raised hopes for the urban renewal of the district, but analysts remain doubtful East Kowloon is emerging as a potential cash cow after a leading developer stunned the market by paying a premium price for two relatively run-down residential lots in the district. Sun Hung Kai Properties last month bought a 155,637 sq ft site in Ngau Chi Wan, a traditional old public housing estate area, at a government auction with a $4.23 billion bid, 20 per cent to 30 per cent higher than the market expected. The site is the second prominent East Kowloon site that SHKP has bought at a government auction since last year. In October, the developer paid $4.7 billion for a 136,714 sqft site in San Po Kong, again 30 per cent higher than expected. Analysts said investors might decide to follow SHKP's lead in investing in the long-term potential of the district. They said the district could see a dramatic revival with impetus from the proposed redevelopment of the old Kai Tak airport. Recent focus had been on West Kowloon, the growth potential of which has been stimulated by the government's proposed West Kowloon Cultural District. SHKP's aggressive bids have raised eyebrows among investors and property consultants, who say that, in the short term at least, the area is unlikely to receive any positive stimulus such as infrastructure or property developments that might boost prices. However, SHKP disagrees. 'Some people said the Ngau Chi Wan site was far too expensive, but we merely think the price does not fit in to the district's current market price,' said Eric Chow-kwok yin, an executive director at Sun Hung Kai Real Estate. He said the company had established a successful track record by adding value to old districts, referring to some of the firm's recent projects such as Chelsea Court, near the Tsuen Wan industrial area, which was sold at a significant premium over the district's market price, and APM, a shopping mall that has spurred the gentrification of Kwun Tong. Mr Chow expected the redevelopment of the Kai Tak site to give San Po Kong a completely new atmosphere. The Kowloon-Canton Railway Corporation's proposed Sha Tin to Central link would further rejuvenate the district, he said. 'The redevelopment of the Kai Tak site will play a pivotal role in the future development of East Kowloon,' said a government planner. The government plans to develop southeast Kowloon into a tourism, sports and recreation hub, with a variety of housing projects, a cruise terminal, a multipurpose stadium and the Metropolitan Park. According to a planning department feasibility study, the zoning plan for the redevelopment of southeast Kowloon is expected to be approved in early 2008. Gazetted in 2001, the redevelopment will have a total reclaimed area of about 133 hectares, on which it was planned to house 260,000 people in 78,000 flats. But this capacity is subject to change after public consultation and a government review. Lack of new housing supply could help enhance the area's attractiveness, Jones Lang LaSalle regional director Lau Chun-kong said. The old Kai Tak airport redevelopment was unlikely to take place soon, and the proposed residential redevelopment in Yau Tong Bay was still not scheduled to start, he said. A group of developers, including Henderson Land Development, had planned to transform Yau Tong Bay into a 22-hectare residential-cum-commercial development, with 38 residential blocks over a gross floor area of 9.7 million sq ft, but the project has been put on hold due to protests against harbour reclamation plans. Ricacorp Properties managing director Ivan Ho said East Kowloon had definite growth potential but it would not be realised in the short term. 'Sun Hung Kai is a big corporation and is strong financially, and it has the ability to take a few years to reshape the entire old district,' Mr Ho said, adding that for an individual investor, 'it's easier to make quick profits in West Kowloon'.