MTR Tai Wai housing project back on market

The MTR Corp will reopen bidding for the Tai Wai Station residential project, two years after its tender was pulled.

A spokesman for the railway operator said the project would be released for tender soon. Developers could submit their interest by Monday.

"The investment cost of the project would remain high," said Alnwick Chan Chi-hing, the head of valuation and professional services at consultant Knight Frank. "But developers would still be interested because of the good location. They would probably form joint ventures to bid for the project."

The estimated investment cost of the project was HK$29 billion in 2012.

"The new land premium levy charged by the government may be lower than the HK$12.7 billion, or about HK$4,410 per square foot, for the site two years ago," said Alvin Lam Tsz-pun, a director at Midland Surveyors. "But the developers still need to afford the construction cost and profit-sharing with the MTR. It is still a heavy investment."

Construction costs have risen sharply over the past two years. It costs at least HK$4,500 per square foot to build mass residential homes.

Since the Tai Wai project is complicated, the construction cost may be even higher.

In March, MTR property director David Tang Chi-fai said the company was revising the terms of the tender of the project because the development involved a big investment and complicated construction work.

"Developers are still cautious on large projects," Lam said. "You can tell from the tender of the Urban Renewal Authority's Kwun Tong redevelopment project last month. The authority had to relax the terms."

He said developers' interest in the Tai Wai project would depend on the land premium amount and the tender terms. "Since the government released plenty of sites in the New Territories for sale in recent years, the developers' offer would be conservative," he said.

The site covers an area of 521,107 sq ft and could yield a gross floor area of 2.7 million sq ft. It could provide 2,900 flats and a shopping centre.

It is one of the few large-scale development projects released for sale this financial year and would help the government meet its target of providing enough land for 18,800 private flats during the year.

MTR awarded the 1,600-flat Tseung Kwan O project to Sun Hung Kai Properties in April.