Mainland developers silent as prime Central site tender deadline passes

Mainland Chinese companies were notably absent as the tender deadline closed for a costly commercial site in Central on Monday, while nine Hong Kong developers submitted bids.

Renowned for aggressive deal making in recent times, mainland developers have been staying away from the city’s real estate market since the beginning of the year, plagued by China’s capital outflow controls and additional curbs on outbound investment in August.

Hong Kong developers were active in the absence of their mainland counterparts.

Leading developers such as New World Development, Wheelock Properties, Henderson Land Development, and Sino Land submitted separate bids for the Urban Renewal Authority’s tender for a site of about 29,000 square feet in Central.

Other bidders include Great Eagle Holdings and Wing Tai Properties, as well as CK Asset Holdings, formerly known as Cheung Kong Property Holdings, controlled by Hong Kong’s richest man Li Ka-shing.

The Peel Street-Graham Street site is planned to provide a gross floor area of up to 434,000 sq ft for office, hotel and retail facilities. Open public space has been allocated at not less than 14,100 sq ft.

The site is estimated by property consultants to fetch between HK$8.2 billion and HK$11 billion, or HK$19,000 per sq ft to HK$24,000 per sq ft, making it one of the most expensive commercial sites to be sold in the city after the record HK$23.28 billion sale of the Murray Road site in Central in May.

Thomas Lam, head of valuation and consultancy at Knight Frank Hong Kong, said mainland developers would be more selective in bidding Hong Kong sites under the tightened regulations.

“They will prefer to bid on residential sites as the investment period is shorter,” said Lam.

Beijing took a further step to regulate outbound investment by announcing news rules on August 18, restricting overseas investments in certain industries, including real estate and hotels, film and entertainment and sports franchises.