"Double standard" is used in tendering. The project becomes the key to reach the target.
The Hong Kong government urgently needs to increase income facing the record-breaking financial deficit at HKD139.1 billion next fiscal year. Post Office's nearly HKD100 billion commercial land site in Hong Kong Central District enters the market. The government announced yesterday that it would launch a new site in No. 3 New Central Harbourfront next fiscal year, and the site includes the General Post Office and the parking lot at Star Ferry Pier. There is rarely "double standard" in tendering, that is, it depends on the design as well as the price. Although the market is falling, the industry is generally optimistic about the bid price due to the high quality of the land. It is expected that the highest sq ft floor area land price can reach HKD50,000, with the highest valuation at HKD92 billion, and it becomes the key to reach the target of land sales income at HKD118 billion next fiscal year.
(By Ngan LunLok)
The Central District of Hong Kong Island is the Hong Kong political and economic center. In recent years, the remaining salable land sites in New Central Harbourfront, Hong Kong Central district are only No.3 and No.5 land sites, with a total area of 2.2389 million square feet. There are called the last two quality sites in the core area. The Development Bureau announced yesterday to arrange the tendering sale of No.3 land site among (it is called Man Yiu Street land in the sales land list) in New Central Harbourfront, Hong Kong Central District next fiscal year. The industry expects that the land price per square feet will break the record of HKD23.28 billion for the Murray Road commercial land site in Hong Kong Central District won by Henderson in 2017 (the sq ft floor area land price was HKD50,064).
Data shows that the site is located north of Statue Square and is adjacent to the International Finance Centre Phase 2. It covers an area of 516,000 square feet and will be developed into phases 3A and 3B with a total floor area of 1.615 million square feet. Among them, Phase 3A to the north of Lung Wo Road will be developed first, while Phase 3B to the south will be developed after the General Post Office is relocated.
The design needs to match the view of Victoria Peak, Hong Kong Central District.
It is worth noting that the tendering this time will use "double standard". Woo Wai-Lun, the Secretary of Development Bureau, explains, "One is the technical details how the design will be done. And the other is the price. The two items are properly scored, and the highest score will win the bid, to ensure that the design elements are properly valued." In other words, this commercial site is not merely a bid for the highest price. Developers who intend to enter the bid need to make more efforts in design.
Woo Wai-Lun points out that the land is a strategic landmark, with a large scale and superiority. It not only provides commercial facilities but also has a landscaped platform that properly connects the waterfront with the place near Victoria Peak. Therefore, the design element is essential. "Double standard" is the right approach. Woo Wai-Lun says that he intends to consult the Waterfront Affairs Committee on the design proposal. The conditions will be disclosed during the bidding process. There is no concern about transparency, and it will not be widely applied to other sites.
Affected by the amendment crisis and the COVID-19 epidemic, the prospects of the commercial market in Hong Kong is being tested. When asked whether the land launch at this time would give the outside world a feeling of selling land at a low price, he emphasizes that the authorities would follow the market and sell the land at current market prices. He points out that it will not be sold under the bottom price, so there is no situation of cheap sales.
Cheong Shing-Dium, the Executive Director and Director of Corporate Development (Valuation and Property Management) of Pu Jin, points out that it is not fair to comment on whether it is cheap or not since the land has not yet been launched. He says that the government has to be careful if it insists on selling land during the dull market in the future to avoid making people feel the sale benefits developers, and ensure the income of the treasury.
There is a risk of failure of bid since the price is high, and the market is dull.
He analyzes that the site is located in the core commercial zone, adjacent to the MTR Hong Kong and Central Stations, with edible landscape and superior location, and the supply is unique. It is bound to attract the attention of the city. He predicts the floor area sq ft land price to HKD50,000, equivalent to the floor area sq ft land price of HKD50,064 for Murray Road land site three years before, and the estimated value can reach HKD92 billion. However, the developer is responsible for the construction of large-scale recreational and cross-platform facilities, which increases development costs.
The budget announced the day before yesterday estimated the land sales income next fiscal year to be HKD118 billion. So this commercial land site would be the key to achieve the land sales revenue target. The Managing Director of Wang Leung Consulting and Evaluation, Cheong Kiu-chor frankly says that there is a risk of failure of bid due to the super high land price, especially in current when the rents for office building are falling. Plus, there are other commercial land supplies during the same period, such as Caroline Hill Road, Causeway Bay, which will share the developer's investment.
Except for the commercial land king in Central this time, there are still 5 commercial land sites for sale next fiscal year, 3 of which are located in Kai Tak, and the rest are in Tung Chung and Caroline Hill Road, with a total commercial floor area of 833,700 square meters.
