Hong Kong property

Hong Kong’s tender for a rare land site on The Peak receives ‘unenthusiastic’ response of just five bids

PUBLISHED : Friday, 12 October, 2018, 8:25pm
UPDATED : Friday, 12 October, 2018, 11:16pm

A luxury residential site on The Peak received just five bids from property developers, reflecting a cooling appetite for risk as market sentiment continues to soften amid the worsening US-China trade war, rising financing costs and a sharp decline in the stock market, according to one expert.

Thomas Lam, executive director of Knight Frank, said the large scale of the site, and the funds ­required to adequately develop it, combined with the availability of other upcoming tenders, were among the reasons only a handful of bids were received despite the rarity of the land.

“The response was not enthusiastic because of the scale of ­development and the cost,” he said. “Headwinds such as the US-China trade war and the vacancy tax, which will increase holding costs, are also in play.”

The Lands Department said the five bids were received by the noon deadline on Friday.

Four of the bids were submitted by major Hong Kong developers, including Sun Hung Kai Properties, Henderson Land Development, CK Asset Holdings and K Wah International. One of the bids represented a consortium consisting of New World Development, Nan Fung Development, Chinachem Group, China Overseas Land & Investment and Wharf (Holdings).

New houses on Hong Kong’s The Peak could fetch nine times the value of Buckingham Palace

Lam said property developers had alternative options among upcoming land tenders, including the second phase of Ho Man Tin Station and Kai Tak, the site of the former airport.

Capital controls imposed by Beijing to stem the outflow of yuan were believed to be a factor in deterring bids by mainland developers, according to Knight Frank.

“We are now seeing more partnerships being forged between Chinese mainland firms based in Hong Kong and Hong Kong local investors,” according to the consultancy.

The land parcel, located at 2, 4, 5, 8, 9 and 11 on Mansfield Road, represents the first time in eight years that the government has offered a site for tender on The Peak.

With gross floor area of up to 400,430 sq ft, the land is estimated to fetch up to HK$40 billion (US$5.1 billion), or HK$120,00 per sq ft.

The six residential towers on the site, now vacant, will be demolished as part of the redevelopment for luxury housing.

The completed flats are expected to fetch up to HK$200,000 per sq ft, while townhouses on the site will go for around HK$250,000 per sq ft, according to Colliers International.

“It is rare to see such a large piece of land in the area. The environment and view of the project is also good,” said Quinly Wan, director of Hong Kong properties development and leasing at K Wah. “Our company is optimistic on the luxury housing market. If we get the land, we will build large homes.”

Sun Hung Kai Properties prevailed in another lacklustre tender for a plot of residential land at Kai Tak, paying a record HK$25.16 billion (US$3.2 billion) for the city’s most expensive land parcel in Hong Kong in May.

In May last year, Henderson Land paid HK$23.28 billion (US$3 billion) for the government-owned Murray Road commercial plot in Central.