Tung Chung site bids rejected in fresh land sales blow

The government yesterday withdrew a residential site in Tung Chung as all four bids from developers came in below the reserve price in a further blow to the city's land sales target.

It was also the fifth land parcel to have failed to secure winning bids so far this year.

Only two sites have been sold by the government this fiscal year and the accumulated amount of HK$15.6 billion only represents 18 percent of its annual land sale target of HK$85 billion.

When bids closed last Friday, the site identified as Town Lot 55 in Area 106B in Tung Chung had received just four tenders, from Henderson Land Development, Sun Hung Kai Properties, K Wah International and Sino Land in collaboration with China Merchants Land.

The Lands Department said all four bids had been rejected as their tendered premiums did not reach the reserve price set by the government's professional valuers, which is in the interest of protecting public revenue.

Taking into account land sources from the government, MTR Corp and the Urban Renewal Authority, there have been five unsuccessful land auctions in 2023, with minimum estimated values for these parcels ranging from HK$800 million to HK$8.7 billion.

Together, the minimum estimated value is around HK$21 billion.

Surveyors believe the tender was unsuccessful because the site is in an area that is still under development, and this caused the bidders to adopt a more conservative approach.

Alex Leung Pui-wang, a senior director at CHFT Advisory and Appraisal, noted the inadequate and uncoordinated infrastructure within the area, highlighting the ongoing development of Tung Chung East Station, expected to conclude in 2029.

Moreover, constraints in the area's sewage system might limit the number of housing units to be built.

A technical assessment report by the government had revealed constraints due to the sewage system's capacity in the area, potentially limiting the construction to about 330 homes, less than the Lands Department's initial forecast of 414 units, according to the Real Estate Developers Association of Hong Kong.

The CHFT thus foresees an extended return period, restricted prospects for appreciation, and increased risks associated with the proposed number of units.

The land's estimated market value ranges from HK$800 million to HK$1.6 billion, with a price per square foot ranging from HK$2,000 to HK$4,000. Leung believes that none of the bids would have likely exceeded HK$2,000 per sq ft.

He now expects the upcoming tender for the first phase of the Tung Chung East Station by MTRC, scheduled for next Thursday, to face great pressure.

himo.liu@singtaonewscorp.com