After three aborted bids in the past month and a half, the land sales market finally broke out of the doldrums yesterday when a small government site in Tsuen Wan was sold at a good price.

The residential site at Po Fung Road in Tsuen Wan was awarded to Kerry Properties (0683) for $1,438.8 million, making it the first government site to be successfully disposed of in 2023, with a floor area price of about $4,578 per square foot, close to the upper limit of the market valuation.

Market participants believe that the three sites that were previously aborted have their own shortcomings, including their large scale, high cost and commercial use, and their aborted bids do not quite reflect the real situation of the property market. The Lands Department announced yesterday that

The Lands Department announced yesterday that the residential site at Po Fung Road in Tsuen Wan was awarded to Kerry Properties at $1,438.8 million, making it the first successful government land grant in 2023.

With a site area of about 89,987 square feet, the maximum floor area of the project is about 314,309 square feet, at a land premium of about $4,578 per square foot, which is close to the upper end of the market valuation, and is expected to provide 490 units with a minimum size restriction of 280 square feet per unit.

The site is adjacent to One Kowloon Peak and Bayview Gardens to the front and Tuen Mun Road to the rear. 10 bids were received at the close of tender last Friday, including those from Sino Land (0083), Cheung Kong (1113), Far East (0035), Eagle (0041), K. Wah International (0173) and Goodman (1271), and also attracted bids from Singapore's "over-the-hill" Hong Fook Industrial.

Prior to the closing of the tender, the market valued the site at around $1.1 billion to $1.51 billion, with a floor area price of around $3,500 to $4,800 per square foot, indicating that the transaction price was close to the upper end of the market valuation.

The site is a waterfront residential project and it is expected that upon completion, the high-rise units will enjoy sea views, although some of the south-west facing units will be blocked from view.

According to Mr Cheung Chiao-chor, Managing Director of Consultancy and Valuation, the closing of 10 bids for the project reflects the low chance of abortive bids and the low total investment amount, which is more in line with the current market situation.

He believes that the local property market is gradually returning to normal and the number of aborted bids for purely residential sites will gradually decrease, but does not rule out the risk of aborted bids for commercial sites. However, the risk of losing bids for commercial sites cannot be ruled out. "Fine, beautiful and fast" will continue to be the choice of developers.

Leung Pui-wong, Senior Director of Valuation at Knight Frank, said that market surveyors are always looking at the latest data to estimate the outcome of the next land sale.

With the Kai Tak residential site being sold at a flat price, the second and third bids being significantly worse, and the Stanley site being lost, the market has mostly revised downwards the amount of land sold this time around.

On the other hand, the residential site in Tsuen Wan was of a moderate size to attract medium to large developers to participate in the bidding, so both the bid price and the number of bids were expected to be at the upper end of the range.

The fact that the site was sold at a good price reflects that there are still some strong medium-sized developers in the market who are more optimistic about the future market during the property market corner and are therefore the first to enter the market.

The University's Visiting Associate Professor in the Department of Real Estate and Construction, Mr Cheung Shing-din, said that the price of the residential site was reasonable and the successful sale was believed to be due to its scale, location and market positioning, and that the developer could still make a reasonable profit even if it sold the units at about $15,000 per square foot in the future at the current land price.

He believes that as long as the size of the site is not too large, the development requirements are not too complicated and it is located in a mature area, the result of the sale should not be too negative and many developers are now actively replenishing their land bank.

The Po Fung Road site was originally a Green Belt site, but was rezoned to residential early this year.

According to the Conditions of Sale, the successful consortium is required to build a 30-place supported hostel for the mentally handicapped and a car parking area.

The purchaser will also be responsible for the paving of the future public roads along Po Fung Road outside the site, which was gazetted last year, and will be returned to the Government.

The developer is also required to submit a number of assessment reports on the project, including noise, sewerage, drainage and traffic aspects.