Kai Tak site goes for a record $25b

Top News | Samantha Wong May 16, 2018
Sun Hung Kai Properties (0016) yesterday outbid four other competitors to pay a record of HK$25 billion for a residential site in Kai Tak by government tender, the Lands Department said. The 178,000-square-foot land parcel on the city's former airport site has a maximum gross floor area of 1.42 million square feet, which translates to a per-square-foot price of about HK$17,776. Other competitors included property giants CK Asset Holdings (1113) and Henderson Land Development Company (0012). Two joint tenders were submitted by a consortium of developers. One was formed by Sino Land Company (0083), Kerry Properties (0683), K. Wah International Holdings (0173) and Lifestyle International (1212). The other was Wheelock Properties, Chime Corporation Limited, New World Development Company (0017) and China Overseas Land (0688). The site is designated for non-industrial use, and the winner has to build residential care homes and day-care centers for the elderly, according to the tender requirements. The site is one of the nine sites in Kai Tak on the government's 2018-19 land sales program. The programs comprises 15 plots capable of providing about 15,000 flats, according to the Secretary for Development. SHKP will invest HK$40 billion on the plot, said deputy managing director of the group Victor Lui Ting, adding it will be a mixed development of residential and retail projects. Lui also said the government will put in a lot of resources to develop Kai Tak. The plot is close to the Kai Tak MTR Station on the Sha Tin to Central Link, which is expected to start operations next year. Property consultants and surveyors expect the completed apartments could be sold at more than HK$28,000 per square foot. Although there were fewer tenders received compared with the previous site, the land parcel was sold at the expected upper-end price point, and could yield at least HK$28,000 per square foot, said a surveyor of Centaline, James Cheung King-tat. "The record-breaking sale should further boost the residential market sentiment," said the head of valuation and advisory services for Asia Pacific at Cushman & Wakefield, Chiu Kam Kuen. China's HNA has purchased sites at aggressive prices in Kai Tak over the past few years. It has bought four sites but sold three as it is facing liquidity risks. In March, Wheelock Properties bought a residential site from HNA Group unit for HK$6.36 billion. In February, HNA sold two land parcels to Henderson Land for HK$16 billion. HNA's vice chairman, Liu Junchun, said earlier that the transactions enables the company's investment to realize a handsome capital return in a shorter time span. SHKP reportedly expressed interest earlier in March in the purchase of the remaining land parcel from HNA, but the deal was not made as the price negotiation between the companies failed.

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