Hong Kong’s first commercial tender of the year, for Kai Tak plot, receives four bids despite 20 per cent drop in valuation
- Sun Hung Kai Properties, CK Asset Holdings, K&K Property and a consortium of Sino Land and Lifestyle International Holding bid for plot at city’s former airport
- Number of bidders is in line with expectations, analysts say
Hong Kong’s first tender for commercial land this year, at the city’s former airport, received four bids on Friday. Property consultants have revised their valuations for the plot downwards by up to 20 per cent.
The commercial site at Kai Tak, which has been split into three plots, was bid upon by Sun Hung Kai Properties, Hong Kong’s biggest developer by value, CK Asset Holdings, which was founded by tycoon Li Ka-shing, K&K Property and a consortium of Sino Land and Lifestyle International Holding. The city’s Lands Department said earlier that four bids had been received.
The number of bids met the consensus within the industry, given the size of the project as well as Hong Kong’s coronavirus-ravaged economy.
Thomas Lam, executive director of property agency Knight Frank, cut his valuation for the plot by 20 per cent to up to HK$7.1 billion (US$916 million), or HK$6,500 per square foot. The total investment would range from HK$11 billion to HK$13 billion, he said. The site can yield a gross floor area of up to 1.16 million sq ft, and is earmarked for the development of offices, shopping centres and hotels.
“The number of bidders is in line with expectations, as the scale of the development is large, so the bidders mainly consists of large developers,” he said. Lam also said he did not expect the government to withdraw the tender, as the plot was situated in the new district of Kai Tak, near the MTR station, which indicated its potential for further development.
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The number of bids received matches the response to two other plots at the former airport, recorded in July and November last year.
Economic uncertainty and the large scale of the project contributed to a relatively cautious response by the bidders, said Alvin Lam, director of Midland Surveyors. He said the valuation of the plot would reach HK$8.1 billion, or HK$7,000 per square foot.
The plot was the second largest at Kai Tak, which meant it would require a larger sum of investment, said Alex Leung, senior director at CHFT Advisory And Appraisal. The number of bids received was on par with expectations, he added.
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Leo Cheung, corporate development director of valuations and property management at Pruden Group, however, said the response to the tender reflected a depressing outlook for Hong Kong’s commercial property market, which was more sensitive to downturns in the economy than the residential sector. “The number of bids is a bit disappointing,” he said.
The city’s economy suffered its worst decline on record, shrinking 8.9 per cent year on year in the first quarter, according to government figures released this week.
Elsewhere, Swire Properties said on Friday that retail sales at all three of its malls in Hong Kong had declined in the first quarter of the year. Sales at Pacific Place dropped 48.3 per cent, according to a filing by the company to the stock exchange made after market close.
