SHKP to build on sites where Housing Society deemed project too costly
Tin Shui Wai sites abandoned by Housing Society as too costly have new lease of life
A private developer is confident it can profitably build on sites where the Housing Society abandoned a residential project for the elderly as being too expensive.
Sun Hung Kai Properties snapped up two sites in Tin Shui Wai last week that had been designated for upmarket housing for the elderly under the society's Joyous Living scheme in 2008.
The society returned them to the government at the end of last year, citing the high construction cost of the project.
Since the two sites are close to Hong Kong Wetland Park, piling work would have to stop for four months during the dry season to avoid disturbing migratory birds, resulting in a longer development period and higher cost.
Alternatively, the developer would need to employ silent piling technology, which would also increase the cost.
The discovery of marble caverns in the porous karst landscape around one of the sites has also added to the construction cost of the project.
In view of these restrictions, combined with soaring wages in the building sector, the society estimated the construction cost would have at least doubled from its forecast of HK$4.6 billion in 2008.
However, SHKP deputy managing director Victor Lui Ting said the development's construction costs were still controllable.
The firm paid nearly HK$4.2 billion, or HK$1,855 per square foot, to buy the sites, in line with market expectations. It plans to invest a total of HK$16 billion in developing a low-density mass residential project.
SHKP estimated the development cost would be HK$7,083 per square foot. It would have to sell the flats at an average of at least HK$9,000 per square foot in order to generate a reasonable profit. That is at least 20 per cent higher than the average of about HK$7,500 per square foot at Central Park Towers, a four-year-old housing estate in the district.
It reflects the developer's confidence in the potential demand for the project, which offers homebuyers a unique environment and views of the nearby wetlands park, so the flats could fetch a premium price.
The Housing Society's project was aimed at middle-class elderly people who would be willing to pay market rent to lease a flat. But the development would have offered only 1,000 flats and a 200-room hotel, not enough to support the building of facilities such as a clinic, a vocational training centre and an elderly resource centre.
A private developer, however, could maximise the development potential of the sites and achieve a higher price with its marketing savvy.
The SHKP transaction continues a trend of falling land prices in the New Territories. In May, Chun Wo paid HK$1,530 per square foot for a residential site in Tuen Mun, the lowest price in the district in 12 years.
The price SHKP paid per square foot for the Tin Shui Wai sites is about 43 per cent lower than the HK$3,243 it paid for another site in Yuen Long last year.
Prices paid for land in the suburban areas are likely to continue to fall.