The tender for the land site in Reclamation Street and Shanghai Street closed yesterday. The Lands Department announced that a total of 5 bids had been received. The surveyor bluntly states that the number of bids was lower than expected because of the small amount of investment in this type of "tiny land." Under normal market conditions, small developers, construction companies, and investors would be interested, but the attractiveness of the project has declined due to the raging epidemic and the economic downturn. Developers' bids are expected to be generally more conservative.
Journalist Ngan LunLok
The land site in Reclamation Street and Shanghai Street of Mong Kok is small, in only 2,718 sq ft, and it is the smallest land launched by the government in more than two years. The site can be built with a floor area of about 24,500 square feet. In response to changes in market conditions, many surveyors have recently reduced their land valuations. The current market valuation ranges from HKD110 million to HKD290 million, with the sq ft floor land price at about HKD4,500 to HKD12,000. Synthesizing the market information, consortiums that entered the bidding yesterday includes many local construction companies and new developers except Sino, since the investment is small.
Bo Ting plans to invest HKD10 billion in reconstruction in 3 years.
Among them, Lau Yue-Fung, the Development Officer of Bo Ting Reconstruction, said yesterday after the bidding that they joint venture with Shun Yu Asset Management this time. For the recent outbreak of the COVID-19 epidemic, he said that it would cause fluctuations in the short-term market conditions, but the impact will be short-term because the rigid demand in the property market is high. So, the long-term outlook is good. He believes that the low-interest-rate environment supports the assets, and the company has a reasonable bid, besides the company plans to build units in 200-300 sq ft. He also disclosed that in the next three years, the company would invest HKD10 billion in the market of reconstruction in Hong Kong.
The land in Reclamation Street and Shanghai Street of Mong Kok is divided into two plots A and B, by a back lane. They respectively face Reclamation Street and Shanghai Street, with the areas in 1,189 sq ft and 1,528 sq ft. According to the land sale constitution, the two plots have their maximum buildable floor area restrictions. The plot A can be built with a maximum floor area of about 10,705 sq ft (8,921 sq ft among of the most can be used as residential buildings), and plot B can be built with the floor area of 13,756 sq ft (11,464 sq ft among of the most can be used as residential buildings). The project must be completed at the end of December 2024.
Knight Frank: The bids are less than the exception due to the impact of the outbreak of the epidemic.
The Executive Director and Director of the Valuation and Consulting Department of the Knight Frank, Lam Ho-Man, expressed that small developers and construction companies and investors are interested in this kind of tiny land. Still, the number of bids is less than the exception, with 5 bids received this time. He believed it is caused by the epidemic, economic downturn, and rising unemployment. Besides, the government's increase in the supply of houses suitable for the first housing and the complexity of the current land sales terms have deterred some developers. It is expected that developers would be more conservative in their bids.
