Kwu Tung North New Development Areas in the northeast New Territories have become a new hotspot for developers with Wheelock Properties winning the tender for the second residential site at Kwu Tung, located in area 24, for HK$4.185 billion, higher than the market valuation of HK$3.94 billion.
The first residential site in area 25 - a nearly 200,000 square foot lot - was secured in April by Sun Hung Kai Properties (0016) for a sky-high price of HK$8.61 billion, or an average price of HK$7,184 per square foot - much higher than market expectations.
However, the 82,064-square-foot Wheelock site sold at an average price of HK$8,499 per sq ft, translating into an 18 percent increase in price per sq ft compared to the SHKP site in area 25.
Wheelock Properties chairman Stewart Leung Chi-kin said he was optimistic about the potential for growth in Fanling and Kwu Tung, adding that the area 24 development can take advantage of the convenient traffic brought by the nearby MTR station.
He explained that the project is estimated to be complete within four years, and the station will be completed within six years - "at a similar time."
Located near Kwu Tung Station on the MTR's (0006) proposed Northern Link, the lot in area 24 attracted 12 bids from local and mainland developers, including CK Asset (1113), Henderson Land (0012) and Sun Hung Kai Properties (0016).
Some first-time players took part in the latest Kwu Tung land tender. For example, Hysan Development (0014) formed a conglomerate with Chinachem and Tai Hung Fai Enterprise, which usually works on urban renewal projects.
Thomas Lam Ho-man, executive director and head of valuation and advisory at Knight Frank, said the higher-than-expected bid price of area 24 in Kwu Tung showed developers have full confidence in the to-be-developed district. The record tender amounts of those lots will anchor land prices in Kwu Tung in the future, he added.
Lam estimated that the total investment to the area 24 site will be around HK$6.5 billion to HK$7 billion.
To earn a reasonable profit, flats on the site will have to be sold at least HK$18,000 per sq ft, which is close to the prices of new estates in Yuen Long.
Kwu Tung has become a new hot spot for developers. SING TAO
