MTR Corp's Tai Wai project gets nine new bids after entry rules eased

The MTR Corp's second attempt at tendering an estimated HK$20 billion residential-retail development at Tai Wai Station near Sha Tin has generated a strong response after entry conditions were relaxed to allow competition by medium-sized developers and mainland firms.

The rail operator said it had received nine bids yesterday compared with just three in 2012, when the MTR Corp was forced to withdraw the tender because of the lack of interest and low bids.

"The response is good, as it has broken up the mega-sized project and cut the land premium payable, to enable mid-sized developers and mainland players to join the party," said Vincent Cheung Kiu-cho, a director at Cushman & Wakefield. "With more participants, MTR Corp will stand a high chance of generating satisfactory bids."

The site attracted big players, including Cheung Kong (Holdings), Sun Hung Kai Properties, Henderson Land Development, Wheelock Properties and New World Development.

One consortium of mid-sized local developers and another in which mid-sized local players teamed up with mainland developers also submitted bids. The first comprised Billion Development, Asia Standard, CSI Properties' residential arm Couture Homes, and YT Realty, while the other was formed by Emperor International, Shimao Property, Kasia and R&F Properties.

Wheelock and New World said they had submitted two bids each - one for the residential portion only and the other for the whole project.

Alvin Lam, a director at Midland Surveyors, estimated the total development cost of the project at about HK$20 billion based on the average building cost of HK$4,000 per square foot.

"The break-up of the project, allowing bidders to give up the retail portion, will give developers more flexibility. With a lower development cost, it will also reduce their investment risk."

Under the latest revised terms, sources said, the Lands Department had cut the land premium payable to HK$10.36 billion, or HK$3,832 per square foot, compared with the HK$12.7 billion or HK$4,410 per square foot imposed in 2012

In order to drum up interest and reduce developers' financial burdens, interested parties can opt to just develop the residential portion, comprising 2,900 units.

In that case, the MTR Corp proposed to cover HK$7.5 billion, or 72 per cent of the land premium. in return for ownership of the whole shopping mall, while the developer would just develop and own the residential portion.

The site could yield a gross floor area of 2.7 million square feet, and provide 2,900 flats and a 600,000 sq ft shopping centre.