HNA pays HK$5.53 billion for its third land parcel at Kai Tak site

HNA Group, which owns hotels and golf courses in addition to its control of Hainan Airlines, has bought its third parcel of development land at Kai Tak, bringing its total shopping bill at Hong Kong’s former airport site to HK$20 billion in three months.

The Chinese company’s unit Top Genius Holdings paid HK$5.53 billion for Kai Tak Area 1L Site 1, according to a Wednesday announcement by Hong Kong’s Lands Department. A spokesman at HNA confirmed to the South China Morning Post that the property and aviation group was behind the purchase.

“It’s no surprise, as the market has been expecting HNA to continue its buying spree in Hong Kong,” said Vincent Cheung Kiu-cho, executive director of valuation and advisory services for Asia at Colliers International.

HNA’s winning bid translates into HK$13,000 per square foot, about 27 per cent higher than the price struck in December by casino tycoon Lui Che-woo’s K Wah International, which paid HK$5.87 billion, or HK$10,220 per sq ft, for its second parcel at Kai Tak.

The latest price is also a 10 per cent premium over market valuations, establishing a benchmark for the area, valuers said.

“HNA has pushed land prices to a new level in Kai Tak,” said Cheung. “The area’s market price is unlikely to fall below HK$10,000 per sq ft at the next tender.”

With its latest purchase, HNA now controls three parcels of land in Kai Tak, equivalent to an estimated 1.5 million sq ft of residential gross floor area.

The former airport site will be transformed into Hong Kong’s second central business district, with 50,000 apartments, 16.4 million sq ft of office space and hotels.

Apartments at Kai Tak will need an average selling price of at least HK$25,000 per sq ft to ensure reasonable profit for the developer, said JLL’s regional director of valuation Dorothy Chow.

“The previous two sites acquired by HNA are closed to the multi-purpose sports complex and have an open view,” she said. “The views are better than the new site.”

The premium price paid at the Hong Kong government’s first land sale for 2017 will spill over to the rest of the property industry, harking to higher prices when developers launch their projects in the area, agents said.

The second phase of One Kai Tak, a residential project developed by China Overseas Land & Investments, have risen to HK$17,000 per sq ft, following the surge in land prices in the area.

Separately, the Lands Department valued a parcel of land at Wong Chuk Hang offered for sale by MTR Corp, the city’s subway operator, at HK$4.684 billion, according to a source with knowledge of the government’s tender document.

Tender for the site, which could potentially be developed into 800 apartment units with 576,950 square feet, will close on February 27.