Builders welcome transparency in Hong Kong redevelopment project

The Urban Renewal Authority’s move to disclose the winning tender’s value, the list of bidders and an anonymous list of submitted bids for the first time as part of a redevelopment project, has received a strong response, as more than half of the invited developers have submitted bids.

The Tung Chau Street/Kweilin Street Demand-Led Redevelopment Project in Sham Shui Po received bids from 20 of the 38 invited developers, according to the authority.

The authority declined further comment.

As part of the new arrangements, the authority will reveal the winning tender’s value and the list of bidders when it announces the results. After the Urban Renewal Authority completes signing the agreement with the winning developer, it will also disclose an anonymous list of submitted bid values for the project.

Developers welcomed the new arrangements.

“[Disclosing the list of submitted values] helps to increase transparency,” said Cheung Sze-mei, senior property officer at Emperor International Holdings, which has submitted a bid for the project. “The values could be used as a reference for submitting other bids in the future.”

Lo Yiu-wing, chief operating officer of Minmetals Land (China), which has submitted a bid for a redevelopment project for the first time, said disclosing all tender prices is a healthy and fair practice.

Analysts said the location and relatively low investment were part of the reasons why the tender was popular.

“Land in urban areas [such as Sham Shui Po] is scarce,” said Thomas Lam, senior director at Knight Frank, adding that as the total investment of about HK$3 billion is not large, it fits the requirements of small to medium-sized developers.

“The land price of the residential portion is likely to range from HK$1.17 billion to HK$1.37 billion, or HK$12,000 to HK$14,000 per square foot. Flats could be sold at more than HK$22,000 per sq ft,” Lam said.

Developers who have been seen submitting bids include Sun Hung Kai Properties, Wheelock Properties, Sino Land and Chinachem Group.

The project is expected to provide 209 small to medium-sized flats that range from 350 to 450 sq ft in two towers of 19 storeys each. Residents of the upper floors could enjoy sea views.

With a plot ratio of nine times, the site is expected to yield a gross floor area of 144,345 sq ft.

The commercial portion at the bottom of the two towers, occupying 46,500 sq ft over five floors, is earmarked as a hub for fashion and design. The winning developer will have to hand these over to the Urban Renewal Authority, cutting into its profits.

The winner will also have to share profits with the authority if the sales revenue exceeds HK$1.8 billion, at a rate of 20 per cent for the first excess of HK$50 million going up to a maximum of 50 per cent, according to market sources.