Once known for hosting one of the world’s most crowded airports, Hong Kong’s Kai Tak area is now becoming one of the city’s busiest real estate markets, with the eight new sites set to auctioned off in the former Kowloon industrial hub in the coming months.
Under the terms of the Hong Kong government’s Land Sale Program April 2017 to March 2018, the coastal area, which once was home base for Cathay Pacific’s 747s, will now be providing one of Asia’s most underhoused cities with 7,500 new flats.
New Sites on the Way in 2H
“Given that Kai Tak is a new development area and has higher flexibility in town planning, the eight sites in the district should be ready to release for sales by the end of the coming financial year,” says Cliff Tse, regional director of the valuation department at JLL.
The eight new plots will be launched in the second half of the year, according to Secretary for Development Eric Ma Siu-cheung, who said late last month that the sites are undergoing town planning procedures.
Kai Tak’s low development density and the plan for connecting the neighborhood to Hong Kong island’s Admiralty commercial district via the MTR underground system by 2021 make the former airport site a prized location. Tse pointed out that, “The large plots on the [Land Sales Program] have higher flexibility in planning and development, and we expect these kind of sites will attract strong interest from mainland developers.
Mainland Companies Land in Kai Tak
Enthusiasm for the area in east Kowloon is already showing up during the current housing boom.
Phase two of China Overseas Land and Investment’s One Kai Tak project showed strong demand last month with all 188 homes made available selling out on the first day. The largest, most expensive flat went for HK$18.85 million and even the smallest unit in this “affordable” housing project went for HK$6.42 million.
Prices for residential land in Kai Tak were pushed above HK$10,000 per square foot in late 2016, and the catalyst came from the mainland.
Aviation conglomerate HNA Group ventured into the Hong Kong home market by setting two land price records in the final two months of last year. In a HK$8.8 billion buy in November 2016, HNA knocked aside 19 other developers and doubled the former highest price paid for land in the area at a whopping HK$13,500 per square foot. Then in December, the company agreed to pay HK$5.41 billion for a neighboring site, which worked out to HK$13,600 per square foot.