Surveyors cut valuations of plot at Kai Tak to February levels as tender draws muted response
- The plot at the site of Hong Kong’s former airport received just seven bids on Friday
- Property surveyors have cut their valuations for the site by as much as a fifth
Surveyors have slashed their valuations for a plot of land on the site of Hong Kong’s former international airport as the tender for the development met with a lukewarm response.
The residential plot at Kai Tak received just seven bids on Friday, less than expected, indicating a much cooler appetite among developers than seen during previous tenders at the same site.
Several of the city’s property surveyors have reduced their estimates of how much the plot will ultimately fetch once the tender is decided.
Cheung Chor-yin, executive director of Citiland Surveyors, cut the valuation by a fifth from HK$10.92 billion (US$1.39 billion) to HK$8.62 billion, or about HK$19,000 to HK$15,000 per square foot.
That estimate would take the price back to a level seen in February when Henderson Land Development and Wheelock Properties bought plots at Kai Tak from HNA Group.
“The housing market has become downbeat,” said Alvin Lam, director of Midland Surveyors, who cut his valuation by 10 per cent. “The potential supply in the area is also high.”
The US-China trade war and a proposed tax on empty apartments might force developers to reduce their prices, further dampening Hong Kong’s property market which has recently taken a downward turn, said Thomas Lam, executive director of Knight Frank. Knight Frank, which had expected 10 bids on Friday, has chopped its valuation for the Kai Tak site by 5 to 7 per cent.
James Cheung, executive director of Centaline Surveyors, has reduced his estimate twice now, by a total of 19 per cent.
The developers that submitted bids on Friday included CK Asset Holdings, K&K Property, a joint venture between Sino Land and K Wah International, Goldin Financial, Sun Hung Kai Properties, China Overseas Land and Investment. The other bidder was a consortium that won the tender for another plot at Kai Tak on Wednesday, consisting of Wheelock Properties, New World Development, Henderson Land Development and Emperor Group.
The number of bids this time is far lower than the 20 received for another Kai Tak site two years ago.
“The housing market is now affected by a number of factors,” said Ewa Lam, administration manager of K& K Property. “[And] there may be a correction but we do not know how big the impact is for now.”
On Wednesday, the first site on the runway of the former Kai Tak airport, next to the one that closed its tender today, was sold for HK$8.33 billion, or about HK$14,500 per square foot to the consortium of four major developers that also submitted bids today. The price was close to the lower end of market valuations, according to Midland.
Notably, the price per square foot was 18 per cent lower than the Kai Tak site picked up by Sun Hung Kai Properties in May for HK$25.16 billion, or HK$17,776 per square foot. That price, which came towards the end of a 28-month rally in home prices, remains the highest paid for land in Hong Kong.
The prices of used homes in Hong Kong dropped 1.5 per cent between July and September, according to the government’s Rating and Valuation Department.
The tender for a site on Mansfield Road, on The Peak, was scrapped last month because the government’s reserve price was not met.
Demand from buyers at recent property launches has cooled drastically. At least four developments have recently sold less than half of the flats on offer on the first day of launch.
The land whose tender closed on Friday, covering 104,497 square feet, could yield a total area of up to 574,733 square feet, the size about eight football fields.
Lam of Knight Frank expected the site to accommodate a luxury development requiring an investment of HK$12 billion to HK$13 billion and selling at more than HK$30,000 per square foot.
Separately, the University of Hong Kong splashed out HK$503.8 million to buy Henderson Land Development’s shopping centre under Novum West, a mass residential development near the university for “for teaching and learning purposes”.