New World wins 'sweet deal' MTR Tai Wai project
With land premium cut to HK$10.36 billion, the developer just needs to invest HK$2.86 billion upfront to build 2,900 flats at the train station
The MTR Corp yesterday awarded the property project at its Tai Wai station in a desperate deal that will allow the winning bidder, New World Development, to cut the initial investment to nearly a quarter.
The mega housing project by the government-controlled rail operator will provide a fillip to the government in meeting this year's private housing target of 18,800 flats.
Announcing that New World had secured the residential portion of the project to provide 2,900 flats, chairman Henry Cheng Kar-shun said: "The project will involve a total investment of about HK$20 billion."
Alfred Lau, an analyst at Bocom International, said New World's option of just developing the residential portion would only require an initial investment of HK$2.86 billion, while the balance of HK$7.5 billion would be paid by MTR in return for ownership of the shopping mall.
"With MTR paying 72 per cent of the land premium, it's definitely a sweet deal, where the developer effectively pays only HK$1,000 per square foot in terms of gross floor area initially for the residential part, compared with an average selling price of HK$11,000 per square foot in the locality," Lau said.
The site could yield a gross floor area of 2.7 million sq ft of residential space with 2,900 flats, and 600,000 sq ft of shopping space.
Lau said New World still needed to bear an estimated HK$3 billion in construction costs for the shopping mall that it would hand over to MTR after the completion.