New World acquires Kowloon site

Business | Dominique Nguy 16 Feb 2017

New World Development (0017) beat eight competitors as it acquired in a government tender a commercial site at King Lam Street in Cheung Sha Wan with a winning bid of HK$7.79 billion.

Its offer was about 4 percent over the upper limit of analysts' valuation of the site.

New World's bid exceeded the HK$7.39 billion tag for a commercial site in Kai Tak last November, deemed the most expensive commercial site ever sold by the government.

The 83,184-square-foot site is about a 10-minute walk from the Lai Chi Kok MTR station and the project to be built on it can produce a maximum gross floor area of 998,210 sq ft. Its price per sq ft was HK$7,808.

Analysts earlier estimated the development site to fetch between HK$5.99 billion and HK$7.5 billion.

New World executive vice chairman Adrian Cheng Chi-kong said the commercial site is the largest that became available in Kowloon West in recent years and the scale of office development to be built on that large site is rare in Hong Kong.

A New World spokesman said initial development plans for the site are for the construction of two grade-A office towers.

Knight Frank senior director Thomas Lam Ho-man said the tender reflected developers' confidence in the future prospects of the local commercial property sector.

He estimates the project's total development cost at over HK$12 billion.

Other bidders for the site included Cheung Kong Property (1113), Sun Hung Kai Properties (0016) and Wheelock Properties.

The last time New World acquired a site in a government tender was in January last year when it bagged the Urban Renewal Authority's residential redevelopment project in Ma Tau Kok.

In 2014, New World acquired an industrial building at Hung To Road in Kwun Tong for HK$1.4 billion and transformed it into an office building, now known as Koho.

Meanwhile, Adidas reportedly agreed take up a 15,000-sq-ft retail shop at Langham Place in Mong Kok at a monthly rent of about HK$5.5 million. The premises are currently occupied by H&M whose rental contract is expiring in October.

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