Different reception expected for Kai Tak, Tai Po sites

Tendering for two residential sites, in Kai Tak and Tai Po's Pak Shek Kok, will close on Friday.

The auction for the Kai Tak site is expected to attract strong competition, but developers are likely to be cautious in bidding for the Tai Po site.

Surveyors estimate the Kai Tak site at between HK$2.27 billion and HK$2.48 billion, or HK$5,500 to HK$6,000 per square foot. But most surveyors have cut their estimates for the Pak Shek Kok site from about HK$5,500 per square foot to between HK$4,000 and HK$4,500 per square foot.

"Developers' responses towards the sites will be different," said Alvin Lam, a director at Midland Surveyors.

"The Kai Tak site will be very popular, as it is in the urban area and in a prime location. But developers will be conservative in bidding for the Pak Shek Kok site, as there is plenty of new housing supply in the area."

The Kai Tak site is close to the future Kai Tak MTR station. It covers an area of 82,603 square feet and could yield a maximum gross floor area of 413,015 sq ft. The winning developer has to provide at least 630 flats.

"The site is close to sites sold to China Vanke and Poly Real Estate. It may attract mainland developers to join the bidding, as the site is in a prime location and could merge with their development sites," Lam said. He estimated its value at HK$2.27 billion, or HK$5,500 per square foot.

The Pak Shek Kok site has an area of 208,822 sq ft and could provide a maximum floor area of 730,876 sq ft.

A nearby site was withdrawn from sale in March because the offers submitted failed to meet the government's reserve price. The poor response led most surveyors to cut their estimates for the value of the Pak Shek Kok site.

"Developers will be cautious in bidding, as there is plenty of new housing supply, and there are still a number of sites in the area that will be up for tender in the coming year," said Vincent Cheung Kiu-cho, national director, Greater China, at Cushman & Wakefield. He said weakening sales had also dampened developers' interest in new sites.

"It usually takes 36 months to build a residential project," he said. "Before the government released the cooling measures in February last year, developers were able to pre-sell a project two years before it was completed. But market sentiment is so poor, they may be able to sell only half the flats after three years."