A leading mainland-based developer paid a higher-than-expected price for a residential parcel at Hong Kong’s former airport, the first such sale by the government at Kai Tak this year.
China Overseas Land & Investment, the mainland’s seventh largest developer by sales, bid HK$4.27 billion (US$550.8 million) for the Area 4E Site 1 measuring 59,719 sq ft in Kai Tak, Lands Department said on Wednesday. The price for the site, which can yield up to 328,453 sq ft in gross floor area, works out to HK$13,009 per sq ft.
It is the developer’s third wholly owned site in Kai Tak since plots were first offered for tender in 2013. It also has stakes in four other sites here.
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“The winning bid was higher than expected, which shows that some developers still have confidence in the residential market outlook, especially the future development of Kai Tak district,” said Thomas Lam, executive director at Knight Frank. “It may also be that some of the Chinese [developers] need to replenish land reserves, so they may have bid higher.”
Amid a general decline in home and land prices because of the Covid-19-induced downturn, the market valuation of the plot had ranged from HK$3.28 billion to HK$3.94 billion, or HK$10,000 to HK$12,000 per sq ft. Land prices at Kai Tak peaked at HK$19,636 in May last year after a consortium comprising six developers had won a site which can yield a gross floor area of 641,180 sq ft.
The state-owned developer beat Sun Hung Kai Properties, CK Asset Holdings, Sino Land, K Wah International Holdings, Kowloon Development Company, Wing Tai Properties, Great Eagle Holdings, a joint venture of Wheelock Properties and Far East Consortium International, and a consortium of Chinachem Group, Empire Group and K&K Property.
China Overseas Land said in a statement after winning the bid that it was optimistic about Hong Kong’s development and it planned to build a luxury residential project on the site at a total cost of about HK$6.5 billion.
The plot, located at the northwestern end of the Kai Tak runway, does not enjoy good sea views and is the smallest residential parcel in the area, according to surveyors.
Mainland developers have been quite successful in the few government tenders launched this year. In July, a joint venture of Vanke Property (HK) and CNQC International won a parcel on Tai Po’s Ma Wo Road. And in October, another plot in Tai Po was acquired by a son of the vice-chairman of Agile Property Holdings as part of a private investment.
Separately, Henderson Land Development won two compulsory auctions involving redevelopment projects in Hung Hom on Wednesday for HK$2.67 billion.
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