Residential site in luxury Hong Kong area surprises with low HK$2.81 billion sale price

A luxury residential site in Stanley sold on Tuesday for a surprisingly low HK$2.81 billion, a strong indication of developers’ extreme caution regarding the high-end sector which is traditionally considered more resilent in a market downturn.

The sale price was 27 per cent below the low end of the HK$3.8 billion to HK$5.43 billion range forecast by surveyors.

The Lands Department said the tender for the site at Wong Ma Kok Road on the south side of Hong Kong Island had been awarded to the highest bidder, K Wise, which is owned by K & K Property Holdings.

“It is an unbelievably low price. What surprised me is the government still went ahead with the sale rather than withdraw it because of low bids,” said Victor Lai Kin-fai, the chief executive of consultancy Centaline Professionals.

The price tag represents a land cost of HK$12,435 per square foot, about 18 per cent lower than the
HK$15,095 per square foot paid for a low-density residential site in Castle Peak Bay, Tuen Mun by Poly Hong Kong in September, 2015.

“But the Stanley site is very different. It is in a traditional luxury location and suitable for standalone houses,” he said.

Lai said he was concerned about the conservative views of the other 11 bidders who took part in the tender.

“The outcome tells us their bids were even lower,” he said.

The tender received bids from 12 major Hong Kong developers including Cheung Kong Property, Henderson Land Development, Sun Hung Kai Properties, Sino Land, Wheelock Properties, Citic, Tai Cheung Holdings, Regal International, Grand Ming Group Holdings and Regal Hotels International.

The site is close to the 10-year-old luxury development Regalia Bay where sale prices are HK$20,000 to HK$28,000 per square foot.

“The low price sale outcome will certainly negatively affect the selling prices of Regalia Bay,” Lai said.

K & K is likely to spend HK$10,000 per square foot on construction, he said, with total investment rising to HK$23,000 per square foot.

The firm said it would invest more than HK$6 billion to build a luxury residential project at the Stanley location.

The Wong Ma Kok site covers 272,000 square feet, with the winning bidder able to build homes with a total gross floor area of 226,000 sq ft.