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All hail Hong Kong's newest 'land king'?

People & Companies / Latest News

Hong Kong SAR

May 25 2017

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Al Gerard de la Cruz

A tender for a lucrative site in Hong Kong’s former airport is expected to close Friday with aggressive bidding from Chinese developers.

The site, known only as Area 1F Site 2 in Kai Tak, could shatter records. The winning bid will be announced next week and could reach between HKD14.3 billion (USD1.84 billion) and HKD22 billion or anywhere from HKD7,500 per square foot to HKD12,000 per sq ft, the South China Morning Post reported.

Such bids would position the parcel as China’s latest “land king,” a moniker ascribed to Chinese parcels that sell at historic prices. “Area 1F Site 2 will definitely become the priciest site by value in the Kai Tak Area,” Victor Lai, chief executive of property consultancy Centaline Professionals, told the Post.

Area 1F Site 2 could yield a generous gross floor area of 1.91 million square feet in a commercial site envisaged to become Hong Kong’s newest business district.

“Kai Tak will be transformed into Hong Kong’s second CBD in a space of 10 years from now,” Vincent Cheung Kiu-cho, deputy managing director for Asia valuation at Colliers Hong Kong, told the Post.

Record land sales continue to loom large in Hong Kong in the wake of the HKD23-billion tender sale of a Murray Road car park last week to Henderson Land. A commercial plot in Kai Tak sold to Lifestyle International Holdings for HKD7.39 billion in November.

New cooling measures on bank loans to property developers could serve as a major deterrent to bidders, however. “Instead of bidding alone, two mid-sized developers could join forces to overcome the credit tightening policy and reduce initial capital commitment and risk,” Lai suggested.

The Hong Kong Monetary Authority announced earlier this month that it would cap the loan-to-value ratio of property developments to 40 percent, effective 1 June. The threshold for construction cost financing will also be capped at 80 percent, down from 100 percent.

SOURCE: Property Report


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