Hong Kong receives 10 bids for Kwu Tung plot in Northern Territories from optimistic but cautious developers
- Kwu Tung will be the main source of land in the short to medium term: CHFT Advisory And Appraisal executive
- Site ‘a good location to take advantage of the Greater Bay Area’, developer Chinachem says
The first parcel of land in the Kwu Tung area of Hong Kong’s northern New Territories has attracted 10 bids from local and mainland China-based developers.
The tender gets the government’s Kwu Tung North and Fanling North New Development Area off to a good start after years of planning, although the bids are likely to be cautious, analysts said.
“Kwu Tung will become the main source of land in the short to medium term,” said Alex Leung, senior director at CHFT Advisory And Appraisal. “It is still in the early stages of development, and the land in the area still lacks a benchmark price. I believe that the bids will generally be cautious.”
The plot could help alleviate Hong Kong’s severe housing shortage. The Kwu Tung North and Fanling North New Development Area covers about 612 hectares. It can accommodate about 188,100 people and create about 40,100 new jobs, according to the Development Bureau. Its development was announced during the 2007-08 Policy Address, among 10 major infrastructure projects.
The companies bidding on Friday included Sun Hung Kai Properties, CK Asset Holdings, Henderson Land Development, Chinachem Group, Great Eagle Holdings, Kowloon Development Company and Chinese Estates Holdings. A joint venture of Wheelock Properties and Far East Consortium (FEC) as well as a consortium comprising Kerry Properties, Sino Land, New World Development and K Wah International submitted bids as well. Mainland China-based developers Kaisa Group and Vanke Holdings (Hong Kong) also submitted a bid jointly.
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The plot of land was “a replenishment of FEC’s land bank in Hong Kong”, the developer said. “The acquisition and the formation of the joint venture will provide FEC with an opportunity to expand its foothold in the northern New Territories district, which is undergoing transformational changes and will be developed into a future town centre accommodating a mixture of residential, leisure and social and community facilities around the proposed Kwu Tung railway station,” a spokeswoman said.
The land’s prospects and the district’s development potential was reason for optimism at Kaisa, said Cai Jin, the general manager of its public relations and investor relations department and director of its capital markets department.
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Currently, the land’s market valuation ranged from only HK$4.8 billion (US$618.3 million) to HK$6 billion, or HK$4,000 to HK$5,000 per square foot, as it lacked suitable benchmark prices and would take a long time to develop, surveyors said.
At a plot ratio of six times, the parcel has a GFA of up to 1.2 million sq ft. It can yield high-density estates with small to medium-sized flats that start at HK$12,500 to HK$15,000 per square foot, according to surveyors. The project has to finish by the end of 2028. A bus terminal there will start service in 2025, while an MTR station will open in 2027. The whole Northern Link rail will be completed in 2034.
The area will take 10 to 15 years to take shape, said Thomas Lam, executive director at Knight Frank. “The infrastructure and commercial facilities still need to be improved,” he said.
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“The price of this land will have an important indicative effect on the land price in the district, and is equivalent to the first parcel sold in Kai Tak. This area is [also] a bit like Tseung Kwan O back then. I believe that the prices for the first batch of homes [once developed] will be more attractive.”
