Sun Hung Kai scores double land deal

Sun Hung Kai Properties won the tenders of the first residential site in the government's Kwu Tung North and Fanling North New Development Area as well as the land in the core area of Guangzhounan Railway Station for over HK$17 billion combined.

The developer won the Fanling Sheung Shui Town Lot No 279 at Area 25, Kwu Tung, New Territories for HK$8.61 billion - or HK$7,700 per buildable square foot - 44 percent higher than the market estimate.

Deputy managing director Victor Lui Ting said the project will mainly provide small-to-medium units after a total estimated investment of HK$18 billion.

The higher-than-expected bid price suggests the developer has great confidence in the future of the new district, said Thomas Lam, executive director at Knight Frank.

The hammer price will be a benchmark for the land value, he added.

Lam predicted the psf price will be at least HK$18,000 upon completion before the developer can earn a reasonable profit, roughly equaling the price of new units in Yuen Long.

The total investment, together with land cost, is expected to range between HK$14 billion to HK$15 billion, said Lam. The site is about 18,567 square meters and designated for nonindustrial purposes, according to the Lands Department.

The minimum and maximum gross floor areas are 66,842 sqm and 111,402 sqm respectively.

The government received 10 bids from local and mainland developers last week. The bidders included Great Eagle, Kowloon Development, Kaisa Group jointly with China Vanke in Hong Kong, Chinachem, Henderson Land, Chinese Estates and CK Asset.

New World Development, K Wah International, Kerry Properties and Sino Land had also made bids as joint ventures.

The site was previously valued at between HK$4.8 billion and HK$6 billion.

The deal came after Chinese developers turned their sights to Hong Kong's border districts as those from Shenzhen consider parts of the SAR more affordable in terms of long-term housing.

"Our long term view is Shenzhen will be the center and Hong Kong the periphery," said an executive at a Chinese developer, which bought land in the once less-appealing north, asking not to be named.

In Guangzhou, SHKP won the site in the core area of Guangzhounan South Railway Station for over 7.08 billion yuan (HK$8.48 billion). The developer aims build it into another landmark integrated project, involving office buildings, shopping malls, hotels, residential buildings, service apartments and public transportation facilities.

The project will offer around 5.3 million sq ft of sellable area, including office and residential buildings, the developer said, adding that it will hold the remaining four-million-sq-ft shopping mall, hotel and part of the office buildings.

It is expected to be completed in phases from 2025, it added.

victor.zhong@singtaonewscorp.com