Will anyone dare to bid for Hong Kong’s ‘next Central’ land site, with a US$18 billion price tag?
Tender opens next month on the site, valued at up to HK$142 billion, will yield 3.16 million sq ft of gross office space spread across three towers
The future supply of grade A office space in West Kowloon – an area already being widely dubbed as “Hong Kong’s second Central” – may be dominated by the winning bidder of one mega government-owned commercial plot being sold next month, according to industry experts.
Sitting atop the West Kowloon terminal of the planned Guangzhou-Shenzhen-Hong Kong Express Rail Link, the huge land parcel is one of the four commercial hotel plots the government plans to sell through tender from April. The other three are being designated as hotel sites, at the city’s former airport area, Kai Tak.
The 632,923 square foot site, at the junction of Lin Cheung Road and Austin Road West, will yield a total gross floor area of 3.16 million square feet of office space, and is likely to be developed into three towers.
It is estimated to be worth HK$95-142 billion (US$12.13-18.13 billion), and could become Hong Kong’s most expensive site ever put up by government tender.
“The winning developer of the lot will definitely become the largest supplier of new grade A office in Kowloon,” said John Siu, managing director at Cushman & Wakefield Hong Kong.
“Such an important property project will have an influential impact on the area’s commercial leasing sector.”
It will be at least a quarter bigger than the 2.5 million square-foot of office space available in the International Commerce Centre (ICC), owned by Sun Hung Kai Properties, Hong Kong’s second largest developer by market capitalisation, industry experts expect.
Hong Kong tallest building at 118-stories, ICC is the local HQ of a host of tenants including investment banks Morgan Stanley and Credit Suisse, and the five-star Ritz Carlton hotel, and sits above West Kowloon MTR station.
Its attached shopping centre, the giant “Elements”, also feature an enviable list of international branded stores, including Louis Vuitton and Chanel.
Net office rents in ICC range from HK$105-$135 per square foot, the highest in Kowloon, according to JLL.
“ICC is similar to [buildings] in Central,” said Denis Ma, head of research at JLL.
He said the latest plot above the high-speed train terminal would certainly enjoy a competitive edge as it take just 20 minutes to travel from there to the heart of Shenzhen’s core business district, Futian.
“The new office space will be sought after either by Hong Kong companies involving in cross border trade, or Shenzhen companies planning to open an office in the city,” said Ma.
Siu of Cushman & Wakefield said existing tenants at ICC – which has a low vacancy rate – has limited room for expansion, while rents in Central have skyrocketed.
Net rents at Two International Finance Centre (IFC), for instance, above Central’s Hong Kong station currently start at HK$192 per square foot and is the city’s most expensive office site.
“This mega commercial site will provide more choice to the market,” said Siu.
Leo Cheung, corporate development director at surveyor Prouden Holdings, adds that potential tenants from Hong Kong and the mainland could well bid for the massive chunk of land as a consortium, given the likely mountainous price tag.
“It is an ideal location for mainland firms to set up a headquarters in Hong Kong,” he said.