Hong Kong, mainland consortium bids HK$8.33b to win Kam Sheung Road station site
A consortium formed by Sino Land, China Overseas Land & Investment and K. Wah International won development rights for a residential project at West Rail’s Kam Sheung Road station in Yuen Long with an upfront lump sum payment of HK$8.33 billion (US$1 billion).
MTR Corp said Grand Ample, formed by the three partners, won the tender to develop phase one of the project.
“The winning bid is at the high end of the market expectations,” said Victor Lai, chief executive of property consultancy Centaline Professional.
He said the HK$8.33 billion represents HK$6,735 per square foot, about 7 per cent higher than the previous tender in Yuen Long station two years ago.
In 2015, Sun Hung Kai Properties won the development rights at Yuen Long station, now Yoho development, for HK$9.32 billion, or HK$6,275 per sq ft.
“Forming a consortium will not only reduce financial burden but also investment risk amid tighter lending,” he said.
Taking into account HK$6,000 per square foot construction cost, he estimated the total investment cost for the project would be more than HK$16 billion. The project needs to be offered for HK$16,000 per square foot to generate reasonable profit, he said.
Under new regulations imposed by the HKMA effective June 1, the consortium will need to fork out HK$8 billion from its internal resources as the overall cap on financing for the entire project has been reduced to 50 per cent of the expected value of finished properties, down from 60 per cent.
In addition, the maximum limit for bank loans used to buy land has been cut to 40 per cent of the site’s value, down from 50 per cent. The cap on loans for construction costs is 80 per cent, against 100 per cent previously.
The site, which could potentially provide a total floor area of 1.24 million sq ft, will provide 1,652 flats, of which 40 per cent, or 661 units, will be smaller than 538 sq ft. The project is slated for completion in 2025.
The winning developers will also be required to offer West Rail a fixed rate of 5 per cent profit sharing on future income generated from the development.
The consortium beat seven developers including China Resources Land, Cheung Kong Property Holdings, Sun Hung Kai Properties and Henderson Land Development.
Sino Group executive director Daryl Ng said the group planned to develop a premium, low-density residential property, which will include green architectural features, sustainable designs encompassing a large landscaped area, and spectacular views.
“It will be complemented by the forthcoming shopping mall in Phase 2 that provides lifestyle offerings,” he said
“It commands a highly accessible location with MTR network connecting to the core business district in 30 minutes and a fast-growing catchment spanning Tsuen Wan and Yuen Long, as well as direct access to Shenzhen. It is a very good addition to our land bank,” he said.