Hong Kong property

Wong Chuk Hang Station attracts huge interest from property developers, showing worries over vacancy tax appear exaggerated

PUBLISHED : Wednesday, 27 June, 2018, 6:43pm
UPDATED : Wednesday, 27 June, 2018, 10:57pm

Hong Kong property developers showed overwhelming interest in bidding for a plot of land atop the MTR station in Wong Chuk Hang, even as the government is poised to released its policy position on the proposed vacancy tax, which would encourage companies to clear their stock of completed, but unsold flats.

A total of 36 expressions of interest, including submissions from Sun Hung Kai Properties, CK Asset Holdings, Henderson Land Development and Sino Land, were submitted for the third phase of development atop the MTR’s Wong Chuk Hang Station, the railway giant said on Wednesday.

The level of interest exceeded expectations as developers had been vocal in expressing their opposition to the vacancy tax, saying the measure, along with other policies to be announced by Chief Executive Carrie Lam Cheng Yuet-ngor, could harm the outlook of the city’s property market.

Mainland developers bidding on the project included Country Garden Holdings and China Overseas Land and Investment.

With a total gross floor area of more than 1.5 million square feet, or the size of 14.5 standard football pitches in Hong Kong, the project is valued at HK$36.14 billion, making it the most expensive railway development in the city’s history, according to Centaline Surveyors.

Mid-sized property companies submitting bids included SEA Holdings and Asia Standard International Group. Analysts said some companies may form joint partnerships to share risks owing to the large investment.

But analysts said changes in government policy in coming days could impact the outlook of some developers.

Chief Executive Lam is due to unveil details of the vacancy tax among other policies on Thursday aimed at cooling the city’s housing market, where prices rose for a 25th straight month in April.

“It is only an expression of interest this round. We may probably see much fewer bids when the actual tender begins,” said Alfred Lau, a property analyst at Bocom International.

Lau cited escalating trade war fears and the fluctuation in stock markets as factors which could affect the enthusiasm of developers.

The third phase consists of a large shopping centre and 1,200 flats in four towers. It forms part of the entire railway development atop Wong Chuk Hang Station, which is expected to provide 4,700 flats.

Property analysts said the residential portion is likely to be made into luxury housing.

“Large-scale residential land along railway stations is scarce. Railway developments are popular. Developers are confident about the prospect,” said Thomas Lam, senior director at Knight Frank.

“Phase three is the only mixed-use development for the three phases at Wong Chuk Hang Station. The shopping centre will become a landmark in the area,” said James Cheung, executive director of the company.

“The phase is closer to the station than phases one and two and has an unobstructed view. Wong Chuk Hang is gradually transforming to a commercial district [from light industrial],” said Cheung.

Cheung said the land price per square foot of gross floor area, including premium, would amount to about HK$24,000.

Leo Cheung, corporate development director in valuation and property management at Pruden Group, expected flats at the development to fetch at least HK$40,000 per sq ft.

For HK$40,000 per sq ft, one could buy a flat of 1,199 sq ft at the Ballafreer development in Repulse Bay.

But Knight Frank’s Lam noted downsides of the project, saying the shopping centre may have to be returned to the MTR Corp and there may also be a profit sharing requirement with the MTR.