Mainland Chinese developers are returning to Hong Kong land tenders as loss of appetite among local rivals brings prices down
- Mainland developers outbidding locals who are holding back amid the city’s gloomy economic outlook, say industry experts
- The drop in competition means they are not having to fork out the eye-watering sums they became known for a few years ago
More mainland Chinese developers will return to the Hong Kong land market as it becomes easier to outbid their local rivals who are holding back amid the city’s gloomy economic outlook, say industry experts.
They have already won three government tenders for sites in the current financial year, without having to fork out the eye-watering sums they became known for a few years ago.
Kaiser Group Holdings, Citic Pacific and a joint venture between China Resources Land and Poly Property secured three residential plots in Tuen Mun, Tai Hang and Kai Tak, the site of the city’s former international airport, for a total of HK$19.6 billion (US$2.52 billion). That accounted for 18 per cent of the HK$110.07 billion generated by land revenue between April 1 and January 12.
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“They have been able to defeat local property giants, which have turned more cautious about the market outlook. This provides an opportunity for mainland firms to win in the government tenders,” said Vincent Cheung, managing director of Vincorn Consulting and Appraisal.
Citi Pacific’s HK$3.2 billion winning bid for a luxury residential site in Tai Hang, southeast of Causeway Bay, on December 18 was just 4.6 per cent higher than the next highest bid, according to the Lands Department. The government started to reveal all the unsuccessful bids anonymously to enhance transparency in March 2018.
Last summer, China Resources Land and Poly Property won a residential site in Kai Tak for HK$12.9 million, just 3.1 per cent above the second-placed bid of HK$12.5 billion. The latest trend is in stark contrast to 2016 when mainland builders paid jaw-dropping prices for government land, pushing prices to record highs.