Strong bidding likely for Kai Tak residential sites

PUBLISHED : Wednesday, 19 February, 2014, 5:10am
UPDATED : Wednesday, 19 February, 2014, 5:44am

Tenders for three residential sites at the former Kai Tak Airport are expected to draw strong bidding interest from developers.

Valuations for the sites, which come up for tender on Friday, vary widely.

Some surveyors believe they could fetch more than the HK$5,175 per sq ft paid for Kai Tak sites last year because they are in a better location and there are no restrictions on buyers.

Others believe they could be reduced to about HK$4,000 per sq ft due to weakening market sentiment. Those valuations put final price tags on the sites ranging from HK$6.69 billion to HK$9.53 billion.

The sites are in the middle of the Kai Tak development area, near the public housing district of Tak Long Estate and the Electrical and Mechanical Department Headquarters.

If a single developer succeeds in winning all three sites the combined parcel of land could amount to 303,977 sq ft and yield a total gross floor area of more than 1.67 million sq ft. That would be enough to support a housing estate with at least 2,590 flats.

The sites will be the second opened for tender in the development area since the middle of last year. But this time the government has not attached its "Hong Kong property for Hong Kong people" conditions on the sites, which meant flats could be sold only to Hong Kong residents.

China Overseas & Investment won the previous tender with a bid of HK$4.54 billion, or HK$5,157 per sq ft.

Patrick Chow, head of research at Ricacorp Properties, said: "The bidding response for the sites should be better than the previous tender for sites in the New Territories as the location is much better."

He forecast they could fetch a total of HK$9.20 billion, or HK$5,500 per sq ft.

But surveyor Albert So Chun-hin said developers would probably be cautious in their bidding as the current market sentiment was poor.

"I believe the sites could fetch about HK$5,000 per sq ft, similar to the prices of the previous Kai Tak sites. I don't think they will go much lower than that."

Prices of flats built on the site could reach about HK$10,000 per sq ft, he added.

Charles Chan Chiu-kwok, managing director at Savills Valuation and Professional Services, expects many developers to show interest in the sites since they were located in the new development area.

But he added: "Their offers will be conservative as construction costs have increased significantly and the property market has entered a down cycle.

"Prices will be below those paid for the previous Kai Tak sites."