Sun Hung Kai pays a record HK$42.23 billion for Austin Road commercial plot in Hong Kong’s costliest land tender
- The parcel is located at Austin Road atop the West Kowloon High-Speed Rail station
- The winner beat CK Asset Holdings, a consortium comprising Wharf Holdings, Sino Land, Henderson Land Development, Chinese Estate Holdings and Lifestyle International Holdings
Sun Hung Kai Properties (SHKP), Hong Kong’s largest developer by value, has won the biggest parcel of commercial land ever sold in the city for a record HK$42.23 billion (US$5.4 billion).
The commercial site is located at Austin Road atop the West Kowloon High-Speed Rail station. The winning bid of HK$13,345 per square foot was at the low end of a valuation range of between HK$41.1 billion and HK$63 billion, or between HK$13,000 per square foot and HK$20,000 per sq ft.
“It is definitely at the low end. It is mainly because the market is not good,” said Alex Leung, senior director at CHFT Advisory And Appraisal, who attributed the downbeat sentiment to the civil unrest gripping Hong Kong and the US-China trade war. “When the market is not good and there is an uncertainty, then investors will certainly be very conservative.”
The low price per square foot indicates developers are pessimistic about market prospects, said James Cheung, executive director at Centaline Surveyors.
“The government is also downbeat on the parcel’s valuation, which helped ensure it was not withdrawn,” Cheung added.
The bargain price may prompt some office owners to cut their asking prices and rents, said Eric Ong, chief operating officer and director of the commercial department at Midland IC&I.
Sun Hung Kai beat CK Asset Holdings, and a consortium comprising Wharf Holdings, Sino Land, Henderson Land Development, Chinese Estate Holdings and Lifestyle International Holdings.
Raymond Kwok Ping-luen, chairman and managing director of Sun Hung Kai Properties, said he was “very happy” about winning the plot. The company would invite other long-term investors to participate with the development, which will “form a synergy” with the International Commerce Centre nearby, he added.
The plot has an area the size of 47 Olympic swimming pools. It can be built into 3.17 million sq ft of gross floor area for retail, office or hotel use, which would make it 12 per cent larger than the International Commerce Centre, Kowloon’s tallest skyscraper.
The record price, however, cannot mask the effects of the unprecedented political crisis that has sapped investment appetite, with the office sector seeing vacancy rates, rents and capital values deteriorate over the last six months.
“The grade-A office market has been in the doldrums since June, as the impact of the social unrest and the US-China trade conflict continue to linger,” said David Ji, head of research and consultancy for Greater China at Knight Frank. “In terms of industry, demand from retail companies has been particularly sluggish. There have been more lease disposition cases in the sector, as many companies adopt cost control measures.”
The total number of leasing deals in the first 15 days of November plummeted 44 per cent year on year to just 134, while the volume was down 70.5 per cent to HK$8.64 million, according to Centaline Commercial.
As for the hospitality sector, visitor arrivals were down by more than 50 per cent in the provisional figures for the first half of November, according to the Commerce and Economic Development Bureau.
