Far East picks up ‘smallest’ land plot at Kai Tak at discount, as public unrest deters developers from long-term investments

Hong Kong’s government sold a land parcel at the former Kai Tak airport at a discount to market expectations, as the city’s 10 consecutive weeks of public unrest deterred developers from committing to long-term investments.

The commercial site is the smallest plot in terms of gross floor area that it can yield. Located next to the proposed Kai Tak Sports Park, the plot sold for HK$2.45 billion (US$312 million), 9.4 per cent less than the lower end of the HK$2.7 billion to HK$3.6 billion range that valuers were looking for. Far East Consortium International won the tender, the Lands Department said.

The price for the plot that can yield a gross floor area of up to 344,448 square feet works out to about HK$7,100 per sq ft. It is the lowest since Lifestyle International Holdings, the operator of Sogo department store, bought a commercial parcel in November 2016 near Tak Long Estate for HK$7.39 billion, or HK$6,773 per sq ft.

David Chiu, chairman of Far East, said the company planned to develop a four-star hotel with 300 to 400 rooms and an office tower on the site at a total investment of HK$4.5 billion, which includes the land cost.

“We were really keen to get the site as it is next to the [upcoming] sports park where Rugby Sevens and concerts will be hosted. Demand for hotel rooms will be strong,” he said. “It also shows our confidence in Hong Kong which, at this time, is facing huge challenges in its economy. But it offers a good opportunity as land price is declining.

“We will continue to expand our hotels business, Chiu said, whose company owns and operates some 10,500 hotel rooms in Hong Kong, mainland and London.