Kwun Tong site to see keen interest from developers

Big developers expected to bid up to HK$3.96 billion today forcommercial plot in area planned as new business district for city

PUBLISHED : Friday, 10 January, 2014, 1:31am
UPDATED : Friday, 10 January, 2014, 1:31am

About 10 Sun Hung Kai Properties executives, including deputy managing director Victor Lui Ting, were seen in Kwun Tong this week ahead of today's tender deadline for a commercial site in the district.

The developer's interest in the site is obvious as it has been trying to transform the industrial zone into a commercial district since the 1990s, developing 3.5 million square feet of retail and office space in phases one to seven of Millennium City from 1998 to 2009.

But SHKP is unlikely to be the only developer interested in the site, with the government keen on turning the area into a business centre.

"I believe many developers will join the bidding and the competition will be strong," said Reggie Lai, a manager at Billion Development, a small developer which focuses on office projects.

Swire Properties paid an accommodation value of HK$4,753 per square foot for a 46,253 square foot commercial site in Kowloon Bay in November last year.

"That surprised me because I think they would have been able to win the tender with a bid of HK$4,500 per square foot," Lai said. "They offered a higher price as they wanted to make sure they would win the tender.

"It shows they are optimistic about the development of the district."

Lai said Billion would be "very serious this time and would submit a higher offer for the Kwun Tong site".

The 55,026 sq ft site on Hang Yip Street, near Hoi Bun Road Park and Ngau Tau Kok MTR station, could yield a gross floor area of 660,307 sq ft. The government has imposed a height limit of 100 metres.

Surveyors estimate the site is worth between HK$2.64 billion and HK$3.96 billion, or HK$4,000 to HK$6,000 per square foot.

"I don't think the land price would be higher than Swire's site as the new site is close to Ngau Tau Kok MTR station," said Vincent Cheung Kiu-cho, a national director for Greater China at Cushman & Wakefield.

"It is not in the core area of the district. And under the land lease, the project won't be able to sell strata titles. It will affect developers' offers."

Cheung estimated the site was worth HK$2.64 billon, or HK$4,000 per square foot.

Lai said the site was attractive because it was difficult to buy a commercial site with a size of at least 20,000 sq ft in the city. Demand for office space in the area was also strong.

"Most of the business areas, such as Central, recorded a fall in office rents last year, except East Kowloon," he said.

Grade A office rents on Hong Kong island fell 21.6 per cent last year, while those in East Kowloon rose 5.8 per cent.

Alvan Chan, a director at Midland IC&I, said new offices in the district had attracted financial companies and international brands over the past few years.