More cold water on Kai Tak commercial sites

All four tenders for a non-industrial plot at Kai Tak have been rejected as their premiums did not meet the government's reserve price, said the Lands Department. It was the second withdrawal of a site in eight months.

The plot - New Kowloon Inland Lot No 6615 at Kai Tak Area 2A Site 4, Site 5(B) and Site 10 - attracted only four tenders, the fewest for commercial plots in the district.

They came from Sun Hung Kai Properties, K&K Property and CK Asset, and a joint offer by Sino Land and Lifestyle International. Bidding closed on Friday.

The plot near the MTR Sung Wong Toi station, which is under construction, has a site area of 19,788 square meters and a maximum gross floor area of 107,797 sq m, the second-largest of the six commercial plots at Kai Tak launched by the Lands Department since 2016.

Market surveyors had valued the group of sites between HK$6.38 billion and HK$10.44 billion, or an average price of HK$5,500 to HK$9,000 per square foot.

The tenders for another commercial site in the district, No 6546 at Kai Tak Area 4C Site 4, were rejected last September. The site had been awarded to Goldin Financial in May last year but the company canceled the transaction in June.

Cushman & Wakefield said the withdrawal was due to the development challenges from the location and usage of the site, which is far from the old Kowloon City and was required to be built as community facilities such as care homes or day-care units for the elderly. Developers are becoming more cautious because of market risks and high construction expenses, said the firm.

Knight Frank said the incident reflects the differences in the land valuation between the government and the developers.

The estate agency expects the rental revenue for commercial land to be lower in the future as tourism and retail sectors are impacted by the pandemic, while it would not be a good time for developers to buy land unless the government lowered its reserve prices.

Earlier this week, Goldin sold a Kai Tak site reportedly to a state-owned enterprise at HK$7.04 billion, a loss of about HK$2.57 billion.

Goldin acquired the site for HK$8.9 billion, or HK$15,500 per sq ft, in November 2018. It was the last plot that Goldin held on the former airport's runway.

Meanwhile, surveyors have been lowering estimates for residential site No 1069 at Anderson Road in Kwun Tong, Kowloon. Bidding closes tomorrow.

Centaline Surveyors has cut the valuation for the 20,167-sq m site by 19 percent to HK$7.08 billion, or HK$6,500 per sq ft, from an earlier estimate of HK$8.7 billion. Midland Surveyors valued the plot at HK$6 billion, or HK$5,500 per sq ft.

One thousand units out of the homes are required to be starter homes and need to be sold at a 20 percent discount.

stella.zhai@singtaonewscorp.com