MTR to sell choice lot at Hong Kong’s gargantuan Lohas Park by end of month
- Sale is likely to set off a stampede by rival private developers, says analyst
- Sale comes as government’s coming year of available land for private development hits 10-year low
Rail operator MTR will soon put up for sale a prized lot in what eventually will be Hong Kong’s largest residential estate, likely setting off a bidding war as land for private development hits a 10-year low.
The lot – to go up for sale by the end of the month – is at phase 11 of the gargantuan Lohas Park. When completed in 2025, Lohas Park will become Hong Kong’s largest residential community, with 58,000 residents in 21,500 units.
The Tseung Kwan O development in the New Territories is being touted as an eco-friendly community near the waterfront which will be filled with green spaces, cafes, pedestrian flyovers, a mall and easy access to the city’s world-class rail system.
“Lohas Park phase 11 will come to market for tender within this month, hoping to yield 1,850 homes,” said David Tang Chi Fai, property director of MTR.
The MTR has so far sold 10 lots. After the sale of this one, it will have three more lots to sell.
“Considering the limited land pool for private residential [development] this year, developers will not let go any chance to expand their land bank,” said Vincent Cheung, a veteran property surveyor.
Cheung predicts that more than 10 private developers will bid for the site at its tender offer.
The timing coincides with the announcement of the Hong Kong government of land it will sell for private development in its April 2019-to-March 2020 financial period. The amount – land for 8,800 private flats – is a 10-year low.
The coming plot for sale at Lohas Park would yield a 950,000 square foot gross floor area. That translates into more than one fifth of the 8,800 private flats expected to be built on the 15 residential sites to be sold by the government in the coming planning period.
Hong Kong’s housing prices had been in a bull run until August. They fell 9.2 per cent through December but then rose a tiny bit in January. The housing sector is one of Hong Kong’s biggest economic drivers, and housing prices in what is the world’s least affordable housing market are always a topic of intense discussion.
Cheung estimated that the development would incur an investment cost of HK$11.4 billion (US$1.45 billion), or HK$12,000 per square foot. That includes HK$2.4 billion, or HK$2,500 per square foot for the land premium price, which would be about 10 per cent higher than the 10th phase, which was won by Hong Kong developer Nan Fung in 2016.
“The phase 11 is adjunct to a [coming] shopping centre – the only one in the neighbourhood,” said Knight Frank executive director Thomas Lam. “Once the mall opens, Lohas Park will see average home prices go higher. ”
That is not far off. Tang said that the interior contract for the 450,000 square foot shopping centre has been sealed and the anchor tenant, which he declined to disclose, has also signed the pre-lease. He said he expects the centre will open in the second half of 2020.
Flats at Nan Fung Development’s LP6 development, or phase 6 of Lohas Park, sold at an average of HK$16,000 per square feet after discounts in October.
The MTR said it is actively looking for ways to develop new homes to boost supply in Hong Kong.
Another four other residential sites – including phase 12 at Lohas Park, and others at Ho Man Tin, Wong Chuk Hang and Yau Tong stations – will be progressively rolled out for tender this year, That will provide a total of 4,200 units, nearly one fifth of the government’s annual home target, MTR officials say.
Meanwhile, 14,000 homes in 100 blocks are targeted to be built at the redevelopment of Siu Ho Wan in north Lantau Island. The site will be put onto the market in the next few years.
