Kai Tak plots still commanding sky high pricesBusiness | 3 Jul 2019 1:31 pm
Hong Kong’s old Kai Tak airport was famed for its hair-raising landings, as planes skimmed apartment rooftops before touching down just minutes from bustling Kowloon, Bloomberg reports.
Now, the site is morphing into one of the city’s biggest real estate developments with multi-million dollar apartments slowly filling up even as new parcels of land go for record prices.
China Resources Land and Poly Property Group last week paid HK$12.9 billion for a plot, an unprecedented amount from mainland developers, who snapped up almost 60 percent of residential land sold by the government in the first half.
Roughly the size of New York’s Central Park, and jutting into Victoria Harbour just across from Hong Kong island, Kai Tak offers a rare opportunity to develop prime real estate.
Sun Hung Kai Properties paid HK$25.2 billion for a single plot last year.
That worked out at US$2,265 per square foot of floor space, meaning a two-bedroom unit will probably be priced at about US$2.5 million, according to Thomas Lam, an executive director at Knight Frank. A three-bedroom apartment in New York’s Upper East Side costs roughly the same.
“With this sort of valuation, it doesn’t sound like the area is going to emerge as a particularly affordable housing location,” said Simon Smith, head of research and consultancy at Savills Plc. “This looks like middle and upper-end housing is probably more likely.”
So far, Kai Tak has contributed HK$173 billion to government coffers since land sales started in 2013, figures from Savills show. The remaining land will fetch about a further HK$110 billion, according to Knight Frank estimates.
Once the entire project is complete – sometime in the mid-2020s – the government expects the area to house 90,000 people, along with hotels, office towers, a state-of-the-art sports stadium and parks.
Kai Tak was the city’s only commercial airport from 1925 until Chek Lap Kok opened on Lantau Island in 1998.