MTR rejects all five bids for plot at Tung Chung, Lantau Island, as developers recoil at huge sum needed to build
- The companies that submitted bids were among Hong Kong’s largest developers, namely CK Asset Holdings, Sun Hung Kai Properties, Henderson Land Development, Sino Land and the Chinachem Group
- Given the costly investment required for the parcel atop MTR’s Tung Chung traction substation, the fact the bids fell short was unsurprising, say analysts
“[MTR] has decided not to accept any of the tender submissions [and] will retender the project in due course,” the rail operator said in a statement. MTR declined to give a further comment.
Given the costly investment required for the parcel, located atop MTR’s Tung Chung traction substation, the fact the bids fell short was unsurprising, according to analysts. With a gross floor area of 929,364 square feet (10,000 square metres), the plot can accommodate between 1,400 and 1,800 flats and would require an estimated investment of HK$11.3 billion (US$1.45 billion) to develop.
“The main reason for the unsuccessful tendering of the Tung Chung Power Distribution Station project would likely be the high land premium of over HK$5,000 per square foot, which is about 10 to 20 per cent higher than market expectations. This might lower the developer’s investment return, and thus affect [their bids],” said Natalie Wong, senior director, valuation and advisory, at property consultancy Knight Frank.
The plot on Lantau Island, where the city’s Disneyland resort and airport are located, received five bids when the tender closed last week. That was far fewer than the 35 expressions of interest the rail operator received in the preceding weeks.