Lone bidder Sun Hung Kai Properties wins West Kowloon commercial plot as tough market deters rival bids
- The Artist Square Tower Project comprises office, retail and entertainment features in the district billed as Hong Kong’s premier arts hub
- Rival developers are likely to have been put off by a property market struggling with rising interest rates and knock-on effects from the pandemic
SHKP was the lone bidder for the commercial plot, which was earlier forecast to fetch as much as HK$10.5 billion (US$1.3 billion).
The sale took place at a difficult time for Hong Kong’s property market, which is battling a triple whammy of rising interest rates, knock-on effects from the pandemic, and a slump in the city’s stock market.
This is likely to have deterred other developers from bidding, analysts said previously.
“SHKP was awarded with the right to develop and operate the AST Project for a period of about 47 years under a Build-Operate-Transfer arrangement and will be responsible for the design, construction, financing, marketing, leasing, management, operation and maintenance of the AST Project,” the authority said.
“The authority considers the tender price offered by SHKP is commensurate with the market level and accepted the tender bid.”
The authority declined to divulge more information about the tender.
The project will be “another landmark area” in the district, according to Raymond Kwok, SHKP chairman and managing director.
“Upon completion of the Artist Square Towers Project, Hong Kong will be one of most vibrant arts and cultural hubs in the world,” he said.
SHKP had been tipped by analysts as a potential bidder for the site given that it had previously won the commercial parcel above the West Kowloon terminus.
This was the second time the site had been put up for tender by the authority. It was originally put up for sale in February.
The latest tender included extending the BOT term to 47 years. While the terms of sale were enhanced, they still were not in line with the standard 50-year grant given to winning bidders in other land tenders in Hong Kong.
The property lies close to facilities including the M+ contemporary art museum, the recently opened Hong Kong Palace Museum, the Lyric Theatre Complex currently under construction and an 11-hectare Art Park fronting Victoria Harbour.
“SHKP is one of the major owners in West Kowloon as they own the ICC as well as the to-be-completed commercial complex on top of the high speed train terminus,” said Vincent Cheung, managing director of Vincorn Consulting and Appraisal.
“They are familiar with the leasing conditions and the potential renters. Their successful bidding for this asset can enhance their commercial synergy in terms of rental setting and adjustment and tenant mix in the district.”
Analysts believe SHKP may have been particularly attracted to the site because the lease term had been extended.
The “lengthened term in the contract” could have swayed SHKP to pursue the project, said Michael C.K. Lee, associate director of valuation and advisory at Prudential Surveyors.
“The bid price could be slightly higher than the previous tender earlier this year as the authority increased the lease term,” said Hannah Jeong, head of valuation and advisory services at Colliers in Hong Kong.