A government land parcel on The Peak could be about to set a new price benchmark for the city
A multi-week tender process that kicked off Friday for an exclusive government land plot on The Peak is expected to generate an important price signal for the real estate market in the final quarters of the year, and may even result in a new record in the city, according to experts.
The site, located on Mansfield Road on The Peak, with a gross floor area of 404,300 square feet, is expected to go for as much as HK$105,000 (US$13,378.2) per square foot.
That translates to a total price of more than HK$40 billion, making it the most valuable plot on record in Hong Kong.
“It will become the new land king,” said Thomas Lam, senior director at Knight Frank. “Available land in this upscale district is very rare and developers would be very aggressive in bidding for the site.”
The Peak and Southern District account for only 1 per cent of the total residential land supply in Hong Kong in the coming five years, according to Lam.
Major developers are expected to make bids, particularly those who are experienced in the ultra-luxury market, even as uncertainties such as the government’s proposed vacancy tax and tightening mortgage rates affect the longer term market outlook.
“The ultra-luxury market is a completely different market, and developers’ appetite won’t be soured,” said Vincent Cheung, deputy managing director for Asia valuation and advisory services at Colliers International. “After all, deep-pocketed buyers just pay for the house they like.”
The last government land sale on The Peak, held eight years ago, was snapped up by Wheelock and Co and Nan Fung Development, a joint venture which paid HK$10.4 billion, or HK$32,014 per sq ft.
The site has since been developed into the prestigious The Mount Nicholson.
The Mansfield Road site has the rare selling point of being one of the highest elevated sites remaining in the government’s land bank.
“That will lure buyers as the higher they live, the higher social status they feel they hold,” said Cheung.
An apartment complex built on the site is expected to sell for at least HK$150,000 per sq ft, while a house can yield HK$200,000 per sq ft, after adding in development and construction cost, and the developer’s profit, according to valuers.
The government tender will close on October 12th.
The government released the site, together with another four residential plots, in July.
While the pace of gains in home prices has eased in recent months, affordability remains an ongoing concern.
According the latest data from Knight Frank, Hong Kong home prices were up 16 per cent on average in June from a year earlier.
The current land price record is held by a site nearby the city’s former Kai Tak airport. That parcel was bought by Sun Hung Kai Properties in May for HK$25.16 billion.
In 2006, SHKP paid a jaw-dropping HK$42,196 per sq ft for a residential lot at 12 Mount Kellett Road on The Peak, making it the most expensive land sale worldwide on a per square foot basis.
In August, the developer released the latest price list of the 12 houses at Twelve Peaks developed on the 12 Mount Kellett Road site, offering a super-deluxe house for HK$175,735 per square foot.