Poly Property Group fails in bid to acquire third Kai Tak site

Developer says it still has enough funds to acquire land, commercial property in city

PUBLISHED : Friday, 10 February, 2017, 9:50pm
UPDATED : Friday, 10 February, 2017, 11:02pm

Poly Property Group, the Hong Kong listed arm of state-owned China Poly Group, failed to secure a third plot of land in the city after it was outbid by rivals in the bidding for four residential sites at Kai Tak offered by government tender.

The group’s failure could be attributed to its overtly cautious stance, especially at a time when land prices have been surging in the city. Poly was outbid by Chinese conglomerate HNA Group which won the Kai Tak Area 1L Site 3 and Kai Tak Area 1L Site 1, for HK$13,600 per square foot and HK$13,000 per square foot respectively. The other two bids were won by local developer Wheelock Properties and K Wah International.

Kong Jian, assistant general manager of Poly Property (Hong Kong), a unit of Poly Property Group, said the firm has been actively participating in government tenders but failed to win a third site.

China’s Poly Property beats local developers to win Hong Kong site for HK$1.73 billion

On being queried whether HNA’s aggressive moves in the Hong Kong land market need to be matched by other developers, Kong said different companies have different strategies.

“We tend to be cautious in our land replenishment,” he said yesterday.

Poly made its first foray into the Hong Kong property market by paying HK$7.42 billion for two residential sites since 2014.

Three years ago, Poly won its first residential site, Kai Tak Area II Site 3, in Kai Tak area for HK$3.92 billion, or HK$6,530 per square foot, setting a record in the area until it was broken by HNA in November.

HNA won the Kai Tak Area 1K Site 3 for HK$8.84 billion, or HK$13,500 per square foot in November 2016, and later pushed land prices in the area to a new high of HK$13,600 per square foot in December.

In 2015, Poly won its second site, designated for luxury residential purpose, in Tuen Mun for HK$3.5 billion, or HK$15,095 per square foot, the highest land price in western New Territories.

Kong said the firm was not affected by Beijing’s move to tighten capital controls and said it had enough funds to finance its further expansion in Hong Kong.

“Hong Kong is an important investment focus for us. Besides residential development, we also plan to acquire an office building,” he said.

Virginia Kao, head of sales and marketing of Poly Property (Hong Kong) said the group considers Hong Kong property as long term investment.

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“We consider Hong Kong’s (economic) environment when we acquire land. We hope that the market considers us as a Hong Kong developer,” she said.

Kao said that the firm’s first residential project, Vibe Centro, in Kai Tak area secured pre-sale consent on Thursday. “We hope to launch the project during the first quarter of 2017,” she said.

Poly will also become the first state-owned Chinese enterprise to offer residential projects for sale in Hong Kong.

Vibe Centro, comprises of 930 units in four blocks with studio flats starting from 200 square feet plus.

The group would primarily target Hong Kong buyers although it also received numerous inquiries from its mainland customers who are interested in visiting the project, she said.

Kong attributed mainland developers recent strong interest for Hong Kong property to the overheated property market at home.

In the mainland, he said developers profits mostly come from top-tier cities, while second-tier cities have to generate sales by volume in order to compensate the thin margins.

“The depreciation of the yuan will also encourage mainland firms to tap overseas markets, and Hong Kong would be a preferred investment destination ,” he said.

Meanwhile, the Lands Department said it has received nine bids for the tender of a business site in Cheung Sha Wan before it closed on Friday. The site will generate a total gross floor area of 998,210 square feet and fetch about HK$4.9 billion to HK$7.5 billion, or HK$5,000 per square foot to HK$7,500 per square foot.