US$1.5 billion Hong Kong residential plot receives only six bids after 38 expressions of interest last month
- Sun Hung Kai Properties, CK Asset Holdings and Henderson Land Development among firms submitting bids for fourth phase of development
- Winning bidder will share 25 per cent of profit from the site with MTR Corporation
The Hong Kong protests continue to weigh on sentiment in the city’s property market – the world’s least affordable real-estate sector. A prime residential site next to the Wong Chuk Hang MTR Station, which would require a total investment of up to HK$11.8 billion (US$1.5 billion), drew a lukewarm response on Wednesday, in a sign that there was little appetite for big-ticket deals.
A total of 38 players had submitted expressions of interest for a tender for the fourth phase last month, but only six submitted bids according to MTR Corporation, which is acting as the government’s agent. These include Sun Hung Kai Properties, CK Asset Holdings, Henderson Land Development, Great Eagle Holdings, Kerry Properties and a consortium formed by Wheelock and Company, Chinachem Group and China Overseas Land & Investment.
“The response is disappointing,” said Vincent Cheung, managing director of Vincorn Consulting and Appraisal, who expected at least 10 bidders.
“Developers’ bidding interest will be affected by the recent social unrest, the unsettled US-China trade war and the soon-to-be implemented vacancy tax,” said Thomas Lam, executive director at Knight Frank.
The flats to be built on the plot are not expected to benefit from a recent relaxation in mortgage lending announced by Hong Kong leader Carrie Lam Cheng Yuet-ngor last week, and this might have contributed to the lukewarm response by developers, according to the industry insiders.
According to the changes announced, homebuyers can avail mortgages of up to 90 per cent – up from 60 per cent previously – of the value of flats worth up to HK$8 million. For flats worth up to HK$10 million, homebuyers can avail loans equalling 80 per cent of a property’s value, up from 50 per cent previously.
According to Vincorn’s Cheung, a 300 sq ft unit on the site would go for HK$8.4 million, which would mean buyers will not be able to apply for a 90 per cent home loan.
“The easing in financing will lure developers to build mass homes instead of the mid to upper end of the segment,” he said.
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The winning bidder will also share 25 per cent of profit from the site with MTR Corporation. The price of HK$11.8 billion includes HK$6.76 billion in land premium to the government.
The site will be developed into a project with 800 units in two towers of 638,305 sq ft. The fourth phase is expected to be completed in 2025. Knight Frank’s Lam said he expected the winning developer will have to sell the units for about HK$28,000 per sq ft to make a reasonable profit.
Elsewhere, Grand Ming Group Holdings released a first batch of 156 units at The Grand Marine, Tsing Yi on Wednesday. The flats, ranging from 299 sq ft to 586 sq ft, were on offer for an average of HK$14,813 per square foot after factoring in a discount of as much as 21 per cent.
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The price was about 4 per cent below the HK$15,400 per square foot Evergrande Holdings was asking for units at Emerald Bay in Tuen Mun, which was launched last week.
To meet eased mortgage lending requirements, Grand Ming will offer 90 units at less than HK$8 million, it said.
