Developers sniff out better deal at MTR site

Tin Shui Wai site draws 19 expressions of interest on hopes of reduced land premium

PUBLISHED : Saturday, 28 December, 2013, 12:03am
UPDATED : Saturday, 28 December, 2013, 12:03am

MTR Corp's second attempt at tendering a large residential site near the Tin Wing Light Rail Station in Tin Shui Wai saw 19 developers submit expressions of interest yesterday, the second-biggest response since April.

Market observers said the strong initial response indicated developers held high expectations that the Lands Department would soften its stand on the land premium payable after the site failed to attract any bids in February. In light of market sentiment, they said they believed the department would have to cut the original HK$2.69 billion land premium for the site by 10 per cent to 25 per cent in order to encourage bidding.

"The initial response is much better than what the market expected," said Alvin Lam, a director at Midland Surveyors. "It shows big and small developers wanted to enter first as this round is only for expressions of interest.

"They don't want to miss any chance in case the government lowers the land premium."

Developers lining up before yesterday's noon deadline to submit tenders to develop the site included Cheung Kong, Sun Hung Kai Properties, Henderson Land, Sino Land, Nan Fung, Chinachem, Lai Sun Development, Asia Standard and Wheelock & Co. The site will yield a gross floor area of 982,280 square feet, or 1,500 units.

MTR Corp withdrew the residential site in Tin Shui Wai from tendering in February when no developer submitted a bid due to the high land premium to be charged by the Lands Department.

The tendering of an MTR site at Long Ping Station (South) in Yuen Long in April saw 20 developers submit expressions of interest, making it the most popular offering this year.

Ringo Lam, a director of valuation at AG Wilkinson & Associates, said the Lands Department would have to reduce the land premium by 10 per cent in order to attract bidders.

Market observers forecast the land premium for the Tin Shui Wai site could be lowered to between HK$2 billion and HK$2.42 billion, or HK$2,000 to HK$2,463 per square foot.

Excluding interest expenses, the land and construction cost for the site could reach HK$5 billion to HK$5.8 billion, they said.