28Hse-Hong Kong Property
Hong Kong Property Market - Yr.2020 Jul: Average price per sq feet $11582 1.45%   (last month:$11753)
Home  - News
News and article search:
   Previous News: (YYYYMMDD)
Property News
Property News(Eng)
New Homes
HK Gov.policy
Land news
Oversea Property
New Homes
Price info.
Photo gallery
Living in Hong Kong
Expert Blog
Wed Property Focus
18 Property
Mr. Poon
Frankie K.S. Wong
News content

11% Less than the Lower Limit Price, Kai Tak Commercial Land Was Sold under Market Expectation.

Image Caption
Violent demonstrations affect the market atmosphere; The Far East won the bid for the sq ft price at HKD7,100.

Hong Kong Wen Wei Po (By Ngan LunLok, Leong Yuet Kam)

The constantly upgrade of violent demonstrations in Hong Kong and the deterioration of the Sino-US trade make Hong Kong's economy to be worse and the risk of recession has soared. The negative sentiment of the economy is also reflected in the land price. The tender for Kai Tak Sports Park commercial/hotel land site was opened yesterday, and The Far East won for about HKD2.446 billion, with the floor area sq ft land price at about HKD7,100 base on the buildable floor area in about 344,400 sq ft, 11.25% lower than the lower limit of the market expectation .

The application for the Commercial / Hotel land site in Shing Kai Road, Kai Tak near to Kai Tak Sports Park was closed on last Friday, with 10 tenders were received, including The Far East Development, Sino, Wheelock Real Estate, SHKP, Cheung Kong, China Overseas, Great Eagle, and K&K Property. The Lands Department opened the tender very quickly yesterday, and The Far East provided the highest bid and won for about HKD2.446 billion. Previously, the market valuation of the land was HKD2.76-3.72 billion, with the floor area sq ft land price at HKD 8,000-10,800. In other words, the land price is 11.25% lower than the lower limit of the valuation.

And it is 45% lower than the price of the land in the same district won by Nan Fung in the year before last.

It is worth noting that the current bid price is over 10% less than the lower limit, which means that other developers were bidding lower, which is a big warning to the market. Compared with the commercial lands sold in the district before, LIFESTYLE INT'L won the No. 2 land site of Kai Tak District 1E for HKD7.388 billion in November 2016, with the sq ft land price at HKD6,733; Nan Fung won the No. 2 land site in Kai Tak district 1F in May 2017 for about HKD24.6 billion, with the sq ft land price at about HKD12,863. The land price of the Shing Kai Road land site in Kai Tak this time is 44.8% lower than that of the land won by Nan Fung.

In fact, the tenders for the Kai Tak commercial land sites have experienced twists and turns this year. Although the Government has launched a total of three Kai Tak commercial/hotel land sites, but the No.5 land site of Kai Tak district 4C was failure of bid at the beginning of this year, then in May, another No. 4 land site of Kai Tak district 4C was sold at over HKD11.1 billion with the sq ft floor area land price at HKD12,888, while the winning bidder Goldin Financial gave up this tender as the reason of “The recent social conflicts and economic instability may have negative impact on the growth of Hong Kong commercial real estate market.”, and the deposit of about HKD25 million was confiscated. In other words, Shing Kai Road land site of Kai Tak is the only commercial/hotel land successfully sold this year.

The Far East won the Kai Tak land for the first time, and is expected to invest a total of HKD4 billion.

The Development Director of The Far East Development Real Estate, Fang ManCheung expressed when accepting the interview from Hong Kong Wen Wei Po reporter that, the group solely invests in this commercial land and considers that the bid price is very reasonable, and they will build two buildings with one for the office building and the other for the hotel, besides it is estimated to provide 400 hotel rooms and the total investment will be about HKD4 billion. The Group is absolutely optimistic about the prospects of the Kai Tak District since there will be the sha tin to Central Link and No.6 Main Line in Kai Tak making the traffic to be well-connected, and they have confidence in the long-term prospects of Hong Kong, he says. It is known, this is the first time for the Far East to win the land in Kai Tak.

The Senior Director and Director of Valuation and Consulting of Knight Frank, Lam HoMan expresses, the bid price was lower than the lower limit previously lowered, reflecting the fact that although developers still have confidence in the Hong Kong property market, but the pricing is conservative due to the effects from the frequent demonstrations in recent days and the Sino-US trade wars.

Industry: Reflecting the pricings of developers were conservative.

He estimates, it needs about ten years to well develop the Kai Tak New Area, so this commercial project is a long-term investment with the main customer sources are the tourists of the Sports Park, thus it requires the developer has high cash flow, and it is estimated the recovery period is about 15 years.

The Professional Service of Centaline, Lai KinFai expresses, the tender for the commercial/hotel land site was opened at a very high speed yesterday, showing that the Government accepted the reality and did not want to see any failure of bid. In fact, although the recent demonstrations continue, but the market reaction was not bad since there had been 10 tenders received on last Friday, while it was sold at price of about 10% lower than the lower limit of the market expectation, reflecting that the developers' bids were conservative.
Translated by 28Hse.com . All right reserved.