HNA Group pays HK$7.44b for fourth plot of land at former site of Hong Kong airport
HNA will combine the four plots into a single development project totalling nearly 400,000 square feet
HNA Group , the highly acquisitive property conglomerate that also owns Hainan Airlines, has paid HK$7.44 billion (US$960 million) for its fourth plot of development land at Hong Kong’s former Kai Tak airport.
The site sold at a price slightly exceeding the market expectation of between HK$6.1 billion to HK$7.4 billion, raising concern it could add fuel to the already hot residential market.
Milway Development, a unit ultimately owned by HNA Group, beat 14 other bidders to secure a 50-year right to develop Kai Tak Area 1L Site 2 in Kowloon, according to a Wednesday announcement by Hong Kong’s Lands Department.
“Home prices will continue to rise taking into account the present land sale and home buying sentiment. But whether or not (HNA) can attract buyers to its planned luxury development when it is offered on the market, we will need to wait and see,” said Shih Wing-ching, founder of property agency Centaline.
The successful tender brings HNA’s total shopping bill at Kai Tak to HK$27.2 billion over four months, giving the company a total of 398,268 square feet of land.
“All four sites will be combined under one development project for the purpose of constructing a world-class integrated residential complex,” said HNA in a statement.
After combining four sites into a big plot, it will yield a total gross floor area of 2.02 million sq ft with an average land cost of HK$13,416 per square foot.
Thomas Lam, senior director at Knight Frank, believes the apartments to be built on the site would need to sell for at least HK$24,000 per square foot.
He forecasts home prices could increase 5 per cent from now to the end of this year.
“The plan by HNA to develop a huge luxury project will turn Kai Tak into a high-end residential area comparable to Kowloon Station,” said Alva To, head of consulting, greater China at Cushman & Wakefield.
HNA, with annual income of 52 billion yuan and assets worth more than 350 billion yuan in 2016, said
the acquisition of the four sites in such a short period of time “shows our confidence in the prospects of establishing a new residential and commercial district in Hong Kong.
“We will make full use of our group’s resources and experience to build a new landmark at Kai Tak, further expanding our group’s international presence and improving HNA Holding’s brand.”