Hong Kong property

Kwun Tong residential site attracts 25 bids despite concerns over infrastructure capacity

Analysts say response reflects city’s thirst for mid-sized land in urban areas

PUBLISHED : Friday, 19 January, 2018, 8:58pm
UPDATED : Friday, 19 January, 2018, 11:30pm

Developers’ enthusiasm for land tenders has shown no signs of easing – a residential site in Hong Kong’s Kwun Tong has attracted stronger than expected interest. But valuers said infrastructure in the region might not be able to support the extra population.

A total of 25 developers submitted bids before the tender closed on Friday noon, according to the Lands Department.

The lot, at the former Anderson Road Quarry in north Kwun Tong, has a site area of 57,631 sq ft. With a plot ratio of 4.5 times, it has a gross floor area of 259,341 sq ft. The estimated value of the tender ranges from HK$2.2 billion (US$281.4 million) to HK$3.37 billion, or HK$8,500 to HK$13,000 per square foot of gross floor area.

Analysts said the strong response reflected the city’s thirst for mid-sized land in urban areas.

“Land in urban areas has been in short supply. As the total investment of about HK$4 billion is not too high, and the land is in an urban area, the site fits the appetite of a lot of developers,” said Thomas Lam, head of valuations and consultancy at consultants Knight Frank.

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But the area is near more than two public housing estates and the site that is designated for building “starter homes”, as revealed by Chief Executive Carrie Lam Cheng Yuet-ngor in her maiden policy address.

“The area has a high density of private and public housing, and only one major road. Traffic will be a problem,” he said.

He estimated the tender value to range from HK$2.2 billion to HK$2.5 billion, or HK$8,500 to HK$9,500 per square foot of gross floor area.

“The developer that wins the site will build flats of small to medium size that start at HK$18,000 per square foot,” said Lam.

Other valuers were more optimistic. Vincent Cheung, the deputy managing director for Asia valuations and advisory services at Colliers International, said the site value could range from HK$3.11 billion to HK$3.37 billion, or HK$12,000 to HK$13,000 per square foot.

But Cheung was also concerned about the traffic load in the region because of the high density of housing estates.

As the total investment of about HK$4 billion is not too high, and the land is in an urban area, the site fits the appetite of a lot of developers
Thomas Lam, head of valuations and consultancy, Knight Frank

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Big developers that submitted bids include CK Asset Holdings, Sun Hung Kai Properties, Henderson Land Development, Sino Land, Kerry Properties, Wheelock and Company and New World Development.

Some smaller developers also entered the fray, including K. Wah International Holdings, Emperor International Holdings, Chinachem Group, Far East Consortium International, Regal Hotels International Holdings, Chuang’s Consortium, Grand Ming, Tai Cheung Holdings, K&K Property Holdings and Minmetals Land.

Some companies submitted bids in cooperation with other companies. These included Wang On Properties and Kam Wah Holdings; Lai Sun Development, CSI Properties and Asia Standard International; Billion Development and Project Management and Manhattan Garments (International); and Chevalier International Holdings, Yuexiu Properties and China Overseas.

The Lands Department awarded a Kowloon Tong site to a wholly owned subsidiary of Wharf (Holdings) on Tuesday for HK$28,531 per square foot, a record for Kowloon.