Bids flood in for East Kowloon site as developers shrug off cooling measures

A large residential site in eastern Kowloon have received strong response, suggesting that the stamp duty introduced last week as the latest property market-cooling measure has not dampened their appetite for land.

Lands Department said it has received 12 bids for the site before the tender closed on Friday.

Hong Kong developers Henderson Land Development and Sun Hung Kai Properties submitted separate bids for the waterfront site in Kwun Tong, which will provide 1,800 units when complete.

Cheung Kong Property Holdings also put in a bid after announcing on Thursday that it would foot the bill for buyers who are liable for a 15 per cent stamp duty on its luxury The Zumurud development in Ma Tau Kok.

Mainland developers such as China Overseas Land & Investment and KWG Property were also among the bidders .

Sino Land said it has teamed up with New World Development, K. Wah International Holdings, Shimao Property Holdings and Lai Sun Development in submitting this tender.

Other joint venture including Emperor International and Grand Ming Group Holding.

“The site is close to MTR (Lam Tin) Station and with sea view. The bidding sentiment will not be affected by the rising stamp duty as the presale of the units to be built on the site will be four or five years later,” said Donald Cheung Ping-keung, a director at Emperor International.

Surveyors estimate the value of the 196,561 square foot site at between HK$4.55 billion to HK$6.2 billion, or HK$5,500 and HK$7,500 per square foot. The plot [number 6584] on Sin Fat Road close to the Laguna City housing estate, will provide gross floor area of 825,546 feet.

Together with the construction and interest expenses, the total investment cost could be more than HK$10 billion.

“The bidding response is not bad, taking into account the fact the residential project has an estimated investment amount of HK$10 billion. There are not too many developers that can afford it,” said Thomas Lam, head of valuation and consultancy at Knight Frank.

The land sale is seen as a test of the market’s sentiment as it is the first government site offered for sale since the introduction of the new stamp duty, which became effective on November 5.

Chief Executive Leung Chun-ying on November 4 announced a standardised stamp duty of 15 per cent for individual and corporate buyers on residential property transaction. Buyers who do not own any residential property at the time of acquisition are exempted from paying it.

Victor Lai Kin-fai, the chief executive of consultancy Centaline Professionals, said major developers, particular mainland firms, would not miss this opportunity as supply of large residential site in urban area is rare.

“Yes, there are many bids but developers view on the market outlook will be determined by the auction result,” he said. “

Alvin Lam, a director at Midland Surveyors expects developers would be cautious in submitting bids considering the negative impact of the rising residential stamp duty.

“It will increase uncertainties of the future prospect of the market,” said Lam who estimate the site worth HK$4.55 billion, the lowest of the market expectation.

The winning developer require building a road to the site, and repairing the slope would increase construction cost, he said.