Small Hong Kong developers spend US$2.6 billion in land, property acquisition binge in past 12 months

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Hong Kong’s small and mid-sized developers are accelerating their pace of accumulating land banks as they bet on an economic revival and chronic housing shortage to keep home prices at elevated levels.

Wang On Properties, Kowloon Development, HKR International and Lai Sun Development have invested nearly HK$20 billion (US$2.6 billion) in the past 12 months to acquire properties in the private market for redevelopment, government tender and settling land premiums to the government to boost their land holdings.

“We did participate in government tenders, but fierce competition has pushed up land cost and squeezed our profit margin,” said Wang On’s chief executive and executive director Nick Tang Ho-hong, who is also the son of the firm’s controlling shareholder Tang Ching-ho. “Acquiring existing buildings for redevelopment is a preferable option for us.”

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The firm made a major acquisition in October last year, buying the Sing Pao Building in Fortress Hill for HK$1.88 billion through a joint venture with Cifi Holdings, a Chinese real estate development company. The partners plan to redevelop it into a residential project mostly consisting of two-bedroom flats.

The Sing Pao Building in Fortress Hill, which Wang On acquired for HK$1.88 billion in October last year. Photo: Handout
The Sing Pao Building in Fortress Hill, which Wang On acquired for HK$1.88 billion in October last year. Photo: Handout

Besides residential development, Wang On has increased its footprint in investment property. In August, it acquired the eight-storey Jumbo Court Carpark comprising 509 parking spaces near Wong Chuk Hang MTR station for HK$401 million from casino operator Melco International Development’s subsidiary Aberdeen Restaurant Enterprises. A month later, it sold a 50 per cent stake to real estate fund Angelo Gordon.

In April, Wang On teamed up with Roland Chiu, son of CK Asset Holdings executive director Justin Chiu, to buy 13,858 square feet of retail property at The Parkville development in Tuen Mun for HK$300 million from New World Development.

The firm has developed six property projects either on its own or through joint ventures after it was spun off from Wang On Group in 2016.

Nick Tang, CEO and executive director of Wang On Properties. Photo: Edmond So
Nick Tang, CEO and executive director of Wang On Properties. Photo: Edmond So

“We hope to further expand our land bank in the next five years,” said the 34-year-old Tang, adding that his company was open to cooperation to help maximise investment opportunities.

As part of Wang On’s five-year plan, Tang said the company plans to undertake two to three projects a year. Among them are two redevelopment projects in which it secured 80 per cent ownership earlier and acquired the remaining units it does not own through the compulsory sale ordinance.

Other small developers too are bulking up their land holdings. Last week, Kowloon Development acquired a large site in Clear Water Bay next to St Joseph’s Home for the Aged, which it surrendered to the government, after paying a premium of HK$9.66 billion. The site will yield a total gross floor area of 2.6 million sq ft.

A general view of the site of the former St Joseph’s Home for the Aged in Ngau Chi Wan in 2014. Photo: Edward Wong
A general view of the site of the former St Joseph’s Home for the Aged in Ngau Chi Wan in 2014. Photo: Edward Wong

A month earlier, HKR International said it would pay a HK$5.24 billion land premium to the government to redevelop a site in Discovery Bay on Lantau Island. The site, which it jointly owns with Citic Pacific, could yield 1.3 million sq ft, enough to build 1,400 flats.

Also last week, Lai Sun won a luxury residential site in Kowloon Tong for a higher-than-expected price of HK$1.6 billion in a government tender. The plot is currently occupied by the RTHK Education Television Centre.

“Small caps are as hungry for land as the big developers and are building up land banks through different sources,” said Alkan Au, senior director of valuation advisory services at JLL.

They have been aggressive as the overall sentiment has improved since the Covid-19 pandemic has been brought under control and Hong Kong’s continuing housing shortage supports the high sell-through rate of new project launches, he said.

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