Hong Kong MTR

MTR Corp raises land premium for sixth phase of Lohas Park by 21pc

PUBLISHED : Wednesday, 24 December, 2014, 7:41am
UPDATED : Wednesday, 24 December, 2014, 7:41am

MTR Corp raised the land premium for the sixth phase of Lohas Park in Tseung Kwan O by over a fifth, a month after selling a site in the area at the lowest price in a decade.

The premium for the sixth phase was HK$3.345 billion, or HK$2,269 per square foot, according to a source who read the tender document. That is about 21 per cent more than the HK$1,874 per square foot premium for the fifth phase and HK$2,059 per square foot for the fourth.

MTR awarded the fifth phase to Wheelock Properties last month at a premium of HK$2.06 billion and the fourth phase to Sun Hung Kai Properties at HK$2.71 billion in April.

"Despite the rise, the levy for the sixth phase is still the fourth-lowest since the first phase was offered for tender in 2004," said the source.

The rail operator awarded the first phase to Cheung Kong at HK$1,540 per square foot.

The number of flats in the sixth phase will increase to 2,400 from the originally planned 1,500, yielding a total gross floor area of 1.47 million sq ft. But under the latest plan, flat sizes will be reduced to about 600 sq ft each from 980 sq ft.

The total investment for the sixth phase could increase to HK$10 billion, market analysts said.

Alvin Lam Tsz-pun, a director at Midland Surveyors, said the higher investment cost would increase risk and reduce the competition as well. "With that kind of investment, only big players will go for it and it will probably get less than five bidders," he said.

Last month, MTR received six bids for the fifth phase. The winning developer, Wheelock, said it would invest HK$8 billion in the 1,600-unit fifth phase.

Lam said the fifth phase had a lower levy because the winner would be required to build a transport interchange. "So we should not compare the sixth and the fifth phase."

But for the latest phase, the rail operator offers higher flexibility as the winner has the option of building up to 2,400 flats and is required to share at least 15 per cent of the profit with MTR.

The tender will close on January 19.