W Kowloon site sells for civil unrest bargain

Top News | Tereza Cai 28 Nov 2019

Sun Hung Kai Properties won a non-residential site on top of West Kowloon Station for a record-breaking HK$42.23 billion despite the economic slowdown.

The price was 71.67 percent higher than the previous record, HK$24.6 billion, paid by Nan Fung Group for a commercial site at Kai Tak in 2017.

The new record worked out at HK$13,345 per square foot of gross floor area.

Analysts said amid social unrest developers go bargain-hunting, which accounted for the relatively low price.

Sun Hung Kai also broke through the record-high price for a residential plot made by itself last year, when it bid HK$25.1 billion to get that in Kai Tak.

But despite setting a new record, the price was close to the low end of the estimated range of between HK$31.65 billion and HK$94.94 billion.

Centaline Surveyors director James Cheung King-tat thought the conservative bidding price was partly due to the large area and it also reflected the developers' gloomy outlook for the property market.

But Thomas Lam, executive director of Knight Frank, believed that since it was still in line with the forecast, it represented developer confidence in local property.

Raymond Kwok Ping-luen, chairman and managing director of SHKP, invited long-term investors to join in the development of the Austin Road project, pointing out that the plot was the largest commercial site in the city in recent years, and has an edge in location - at West Kowloon Station and on the MTR's Airport Express Line, Tung Chung Line and West Rail Line.

He said the station is important for grasping opportunities in the Greater Bay Area.

With the IFC in the 1990s, ICC in the 2000s and this new plot, Kwok stressed SHKP has been confident in Hong Kong's future.

He expected to build the site into a comprehensive hub offering more than 8 million sq ft of floor area for Grade A offices and three million sq ft for retailing and entertainment, as well as five-star hotels.

The market had estimated the land price would be HK$140 billion at first when it appeared in the government land sale plan, given the unique location and large scale.

West Kowloon Station connects with stations in Shenzhen and Guangzhou. The site is next to the International Commerce Centre.

The plot has an area of about 643,100 square feet. The total gross floor area ranges from 1.9 million sq ft to 3.16 million sq ft. The plot after completion is expected to be able to provide three buildings of at least 19 stories each.

Following the ongoing protests and economic slowdown, some analysts cut the estimated price for the plot to as low as HK$31.6 billion before the tender deadline on November 22.

Eric Ong Hung-cheung, chief operating officer and director of commercial department at Midland IC&I, said Sun Hung Kai is likely to create a landmark building on the site. There could be also synergy with ICC, attracting mainland companies to take on a lease.

Ong forecast the development cost was likely to be HK$19,000 per sq ft due to its proximity to ICC, and office rents could be more than HK$100 per sq ft.

The site is designated for non-industrial purposes, meaning it could be used for building a hotel but not for homes. With a total estimated investment of HK$65 billion to HK$70 billion, the project is expected to include a grade-A office building, five-star hotel, retail buildings and others, said Lam.

The 50-year land grant attracted only three bidders - the least for a government commercial land sale in the past eight years. Other tenderers were City Champion Investments under CK Asset, and a consortium, Novel Icon, formed by Chinese Estates, Henderson Land Development, Lifestyle International, Sino Land, and Wharf Estates.

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