More bidders for big Kwun Tong redevelopment after URA eases terms

The Urban Renewal Authority (URA) succeeded in attracting more bidders for the latest phase of its biggest redevelopment project after it relaxed the terms for the sale of the land following an aborted auction earlier.

The six bidders for the site in Kwun Tong yesterday were Sun Hung Kai Properties (SHKP), Cheung Kong, Henderson Land Development, Great Eagle, a joint venture of Sino Land and Chinese Estates, and a consortium of Wheelock Properties, Nan Fung Development and New World Development.

Only four developers, including SHKP, Cheung Kong and Wheelock Properties, made bids last month, when the site was first put up for tender.

The URA withdrew the site then because none of the offers met its requirements. But as it is one of the few large residential projects available for tender this year, a failure by the URA to award the site to a developer would have put a big dent in the government's target for building new homes.

The authority was forced to remove its requirement for a minimum bid of HK$8 billion and revise other terms of the sale.

Stewart Leung Chi-kin, chairman of Wheelock Properties, said: "We joined the tender with our partners because the URA lowered the threshold by removing the HK$8 billion requirement."

Leung said he thought developers would submit better offers than the first time around but none higher than HK$8 billion.

"The URA should be able to sell the project this time. If they fail to award the project again, it means their requirement is too high," he said.

SHKP deputy managing director Victor Lui Ting said the project was "more attractive after the URA revised the terms".

Under the new terms, the winning bidder will have six years to complete non-residential portions of the project and public facilities, against four years and eight months under the initial tender. But there was no change to the URA's plan to buy back the retail portion for HK$1.8 billion.

"Although property sales have improved recently, developers remain conservative in bidding for land, particularly for sites that are large or have complicated development terms," said Vincent Cheung Kiu-cho, national director for Greater China at Cushman & Wakefield. "It will take six years to build the podium of the Kwun Tong project. That is a very long development period. It means developers have to bear a higher investment risk and higher construction costs."

The Kwun Tong redevelopment is the largest project undertaken by the URA. It covers more than 5.35 hectares.

The authority awarded the first phase of the project in 2009 to Sino Land, which developed the Park Metropolitan estate.

The latest phase covers a 234,160 sq ft site at Yue Man Square and Hong Ning Road, which could yield total gross floor area of 1.65 million sq ft and 1,700 flats. It will have a non-residential floor of 357,580 sq ft for shops, a two-level public transport interchange and a hawker bazaar.