Price squeeze hits Kai Tak siteTop News | Stella Zhai 13 Aug 2019
Far East Consortium International won the commercial and hotel site on Shing Kai Road, adjoining the Kai Tak Sports Park, on a 50-year land grant for HK$2.45 billion - 12.5 percent less than the lower end of market expectations.
Surveyors had lowered the plot valuation to between HK$2.76 and HK$3.72 billion, or HK$8,000 to HK$10,800 per square foot, amid the social unrest and the trade tensions.
The latest bid granted by the government came after the company acquired the Sha Tin Town Lot No 610 in March 2016.
Far East outbid nine other developers who tendered on Friday - CK Asset, China Overseas Land and Investment, Diamond Linkage, Wheelock Properties, Astute Max, Sino Land, K&K Property, Great Eagle and Sun Hung Kai Properties.
The plot granted to Sanon, a subsidiary of Far East, is known as New Kowloon Inland Lot No 6607.
It has an area of 121,375 square feet and a maximum gross floor area of 344,448 sq ft, representing HK$7,100 per sq ft.
The last commercial site in Kai Tak sold by the government - excluding a plot worth HK$10 billion but given up by Goldin Financial in June - went back to November 2016. It was acquired by Lifestyle International for HK$7.39 billion or HK$6,630 per sq ft in terms of site area.
This represents an increase in the price of 7 percent for commercial land in the district during the past three years.
Thomas Lam Ho-ma, executive director and head of valuation and advisory of property agency Knight Frank, said commercial sites are mainly supported by the consumption sentiment of the market, which has been fluctuating amid the social unrest and trade tensions.
Local developers are also getting more cautious, he added, leading to lower-than-expected prices for commercial plots.
Lam expects it will take the developer 10 years to complete the project on the Kai Tak site, saying this long-term investment mainly targets visitors to the Kai Tak Sports Park, which is under construction.
Knight Frank expects a three-to-four-star hotel with 300 to 350 rooms to be built, costing the company HK$5 billion to HK$6 billion.