Mainland developers stay away from Hong Kong’s costliest land sale, as remittance rules bite
Nine bids were received for the Murray Road site, valued at between HK$15.7 billion to as much as HK$22 billion, which can be developed into a 30-storey office building.
Mainland Chinese buyers had been setting one price record after another as they snapped up Hong Kong’s commercial land and residential property for the past year.
But as the city’s government prepared to sell what could become the costliest land parcel in the city -- the first grade A commercial land site in downtown Central to go on the market in two decades -- mainland Chinese developers were nowhere to be seen, snared by a tightened remittance process that made it more difficult for capital to flow out of China.
“Without mainland buyers aggressively bidding, it will be difficult to achieve some of the eye-popping prices that were being flaunted,” said Denis Ma, head of research at JLL.“This may potentially open the door for local developers, who’ve been adopting a more pragmatic approach toward their bidding strategies, to sweep in and win the site.”
Nine bids were received on Friday noon when the tender closed on the Murray Road site in Central, where a five-storey public car park now stands, according to the Lands Department.
Bids were received from Sun Hung Kai Properties, Nan Fung Development, Henderson Land Development Co., Cheung Kong Property (Holdings), Wheelock & Co., Chinese Estates Holdings and an unidentified party.
Among Chinese developers, bids were received from Shimao Property Holdings of tycoon Hui Wing Mau (許榮茂), as well as Chongqing-based CC Land Holdings. Both companies are listed on the Hong Kong Stock Exchange.
The site, which can be developed into a 30-storey grade A office building with 450,996 square feet of gross floor area, or 16,000 sq ft per floor, is valued at between HK$15.7 billion to as much as HK$22 billion (US$2.82 billion), or HK$35,000 to HK$48,000 per sq ft, according to surveyors.
The market had been expecting cash-rich companies such as the Industrial & Commercial Bank of China (ICBC), the HNA Group and major insurers to be among bidders for the Murray Road parcel.
Several of them had made inquiries about the site over the past year, agents said.
The low turnout was “out of our expectations,” said Vincent Cheung Kiu-cho, Colliers International’s deputy managing director for Asia valuation, who had expected between 10 and up to 15 submissions of interest from both local and Chinese developers. “China’s capital control may be one of the reasons as the total investment cost of the site could go up to HK$28 billion including construction cost.”
The site could eventually be sold at HK$35,000 per sq ft, comparable with the HK$39,000 per sq ft price fetched by an existing grade A office space at 9 Queen’s Road Central, Ma said.
“The market is over optimistic the office market,” he said.
The winning developer will be required to include a public car park in its building plan that can accommodate 102 parking lots for private cars and 69 lots for motorcycles, according to the Murray Road site tender document.
A warmer reception may await at another tender at the former Kai Tak airport site, where Area 1K Site 1 is up for sale.
The land parcel, estimated to fetch between HK$6.3 billion and HK$7.48 billion, has drawn bids from 16 developers. They include Sun Hung Kai, China Resources Land, Chinachem, China Overseas Land & Investment, K. Wah International, Vanke Property (Overseas). Other bidders including a joint venture between Emperor International and Grand Ming Group Holdings . The winning bid for both parcels will be announced next week.