Henderson to quit Hung Shui Kiu development

Henderson Land (0012) is expected to receive HK$3.9 billion from the government in compensation for a Hung Shui Kiu site that recovered by the authority - a sign that the developer may have quit the development.

This comes as major developers remain cautious about the Northern Metropolis project amid concerns over high infrastructure development costs and land premiums.

It was announced last Thursday that the government would resume about 176 hectares of land for the Phase II development of the Hung Shui Kiu/Ha Tsuen New Development project and eligible residents will be compensated.

Henderson said that of the 6.57 million sq ft of land reserve it has in Hung Shui Kiu, 3.5 million sq ft will be resumed by the government. The amount of compensation is estimated to be HK$3.9 billion in accordance with the compensation rate of HK$1,114 per sq ft set out in the gazette notice.

In relation to the Kwu Tung North/Fanling North New Development Areas in April, Henderson is also expected to get about HK$1.86 billion for the 1.45 million sq ft of land under the company.

As a result of the compensation for the Hung Shui Kiu site, Henderson stands to book a pretax profit of HK$3.1 billion for the current financial year through December.

The Hung Shui Kiu project is planned to provide about 9.7 million sq ft of non-residential gross floor area as part of the Northern Metropolis in line with China's 14th Five-Year Plan.

Land exchange applications in relation to these sites closed at the end of April with the Lands Department saying a total of nine applications have been received.

Speaking on condition of anonymity last month, a major developer called on the government to amend the plan, saying a high office vacancy rate in Hong Kong has made the government plan outdated. It then proposed 40 percent of the floor space be allocated to provide 8,000 residential units.

It also said it may be forced not to join the project if the government adhered to its plan.

The Development Bureau countered that developers should eye long-term growth.

Amid an environment of high interest rates and weak housing demands, local developers have shown a lack of appetite for new sites while working to reduce their new home inventories.

According to Centaline Property Agency, the secondary market remained weak on the weekend, recording only six deals at the 10 blue-chip estates - a slump of 40 percent week on week.

The agency blamed the weather and few low-priced units being available for the secondary market weakness.

Hong Kong Property Services recorded seven transactions in its 10 major estates over the same period.