Just closed on Monday and received six bids, adjacent to the MTR Sung Wong Toi Station, Kai Tak Area 2A, Site 2 and 3, the Lands Department just two days apart in yesterday's rapid opening of the bidding, the site can be built more than 1,300 units by the Sino Land-led consortium of 5.35 billion yuan, the floor area per foot of the land price of about $5,392, in line with the market's expectations, but compared to December last year, the Cheung Kong Real estate bidding for a low price of neighbouring However, compared with the low price of Cheung Kong's bid for the neighbouring residential sites Nos. 4, 5(B) and 10 in Area 2A last December (with a per-square-foot GFA of about $6,138), the current per-square-foot price is about 12% lower, and has set a new 10-year low per-square-foot price for sites in the area.
Sino Land's vice-chairman, Mr Wong Wing-kwong, said the company is confident in the future of Hong Kong and will build quality residential projects.
The project received six bids on Monday, attracting large and medium-sized developers, most of which were sole proprietors, including Cheung Kong, SHKP, Henderson Land, Wheelock Properties and Nan Fung, while Sino Land partnered with China Overseas, Eagle and Chinese Estates to form a consortium to enter the bidding process, which ultimately succeeded in winning the site.
The site is adjacent to the MTR Sung Wong Toi Station and has an area of approximately 145,303 square feet, with an estimated gross floor area of approximately 992,279 square feet, providing approximately 1,325 units.
The Conditions of Sale stipulate that the successful developer will be required to construct a Neighbourhood Elderly Centre, a Hostel for Severely Mentally Handicapped Persons, a Day Activity Centre, a District Support Centre for Persons with Disabilities, a Boys' Home, an Online Youth Support Team Centre and a car park. It is also required to build a 175-metre-long underground street, accounting for about 11 per cent of the entire underground street in Kai Tak. The project was earlier valued by the market at about $4.5 billion to $5.95 billion, with a per-square-foot land premium of $4,500 to $6,000.
Mr Wong Wing Kwong, Vice Chairman of Sino Land, said that the project is adjacent to Sung Wong Toi Station, which connects Hong Kong and Kowloon to the West Kowloon Express Rail Link station. It is also situated in a high quality school network and is connected to the Kai Tak Underground Shopping Street, as well as being close to world-class infrastructure such as the Kai Tak Sports Ground, which offers a full range of recreational and cultural facilities, and the development of the district is maturing, which will make it a highly desirable development for the market.
He emphasised the Group's confidence in Hong Kong's future and its commitment to sustainable development through the construction of quality residential projects with landscaped grounds, green and comfortable amenities, smart home design and residents' clubhouses.
Analysts say that the fact that the bidding was won by a consortium reflects that developers prefer to co-operate to diversify their risks in the face of uncertain market conditions. In fact, the total investment in this project is estimated to be more than $10 billion, and under the high interest rate environment, the financing cost is naturally higher.
The successful consortium, after sharing the costs equally, each company only needs to invest about $2 billion or so to purchase a large site in the urban area at a time when the property market is in the doldrums, so the investment cost is relatively easy and the risk is thus less. On the contrary, if the other five developers enter the tender in the form of sole proprietorship, their bids will naturally be lower because of the large amount of investment. Moreover, this time the winning consortium combination, they do not have agricultural land can be increased through premium land reserve, can only rely on land auction, the bid will also be more aggressive.
Centaline surveyors line Zhang Jieda said, this time the site can be successfully granted, not affected by the Tsuen Wan Yau Kom Tau first land abortive bid, visible developers are still actively competing for urban land, coupled with the location of the site is superior, near the Sung Wong Toi station, large shopping malls and commercial projects are expected to be completed within the year and the opening of the district will continue to increase the demand for residential units.
Unfortunately, the site has a number of terms and conditions, including the need to build underground street facilities and a number of social welfare facilities, which will take time to develop, and developers have been conservative in their bids. He believes the site can be developed into small and medium-sized residential flats and expects the project to sell for $15,000 per square foot upon completion, after calculating construction costs and a reasonable profit.
Meilian surveyors firm director Lam Tze-bun pointed out that the project development terms are more complex, increase a certain amount of construction costs and time, the total investment amount is larger, higher investment risk, coupled with the impact of the current market atmosphere, resulting in the project floor area land price hit a record low since 2014 in the region. In his view, the response to the tender has been impressive, and the low p.p.a. is understandable and reflects that the Government has made certain adjustments to the reserve price.
According to Mr Cheung Chiu-chor, Managing Director of ICP Consulting and Valuation, the land price awarded at Kai Tak is within expectation because the land sale terms stipulate that the successful consortium has to build a series of social welfare and government facilities, which will lengthen the development time, and the interest rate hike environment will be a consideration for the developers to make a bid.
In his view, Cheung Kong's earlier sale of Yau Tong Sea Friendly at a price of about $14,000 per square metre has caused a fervour in the market, and it is estimated that the reasonably expected price of the Kai Tak project is about $17,000 to $18,000 per square metre, so its floor area can be considered to be "attackable and defensible", and even if the market situation does not improve in a few years, the project will still have a reasonable profit.
