CK Asset to Transform Industrial Site into $5B Residential Project

Hong Kong developers are rushing to meet growing demand for new homes amid a chronic supply shortage, with CK Asset Holdings applying to rezone a New Territories industrial site into a residential project that could supply up to 4,706 flats upon completion.

CK Asset, the city’s second largest developer by market capitalization, plans to transform the East Fo Tan Industrial Area into a residential project that is estimated to provide about 3.15 million square feet (292,644.5 square metres) of residential and retail space, according to Natalie Wong, senior director of valuation and advisory at Knight Frank.

The developer’s proposal to tackle Hong Kong’s housing crisis is driven in part by the recent introduction of a pilot scheme for charging land premiums at standardised rates, which would encourage redevelopment of old industrial buildings, Wong added.

“Upon completion, the total estimated market value would be [between] HK$46 billion to HK$50 billion,” said Wong, noting that the estimated per-square-foot unit rate for the residential portion of the project would be in the HK$18,000 and HK$20,000 range.

Future Fo Tan Community

The company controlled by property tycoon Li Ka-shing is aiming to build 24 residential towers on the 572,245 square foot site, with 28 to 38 storeys including a retail section and parking, according to its application to the Town Planning Board.

Should the rezoning of the East Fo Tan Industrial Area be approved, the residential portion, which has a plot ratio of 5.0 and would span a floor area of about 2.8 million square feet, would account for 90 percent of the full project’s gross floor area, said Knight Frank’s Wong.

Also included in the project proposal is a 24-class primary school occupying a 51,460.5 square foot site, which would be built to meet “future educational needs of the Fo Tan community.”

With the Shatin to Central MTR line scheduled for completion by July next year, the area would also benefit from increased transport connectivity between the New Territories and Hong Kong Island, said Vincent Cheung, managing director at Vincorn Consulting.

Making Way for Redevelopment

“CK Asset’s decision to apply for rezoning of the site was due in part to the recently launched pilot scheme to charge land premiums on lease modifications at standardised rates,” said Wong.

“Under this scheme, developers could apply for lease modifications of industrial buildings at standard rates. This provides an incentive for more developers to redevelop industrial buildings, as land premiums charged at standardised rates may be lower than land premiums charged under the conventional mechanism.”

Wong added that CK Asset’s application to rezone the New Territories site is also due to the developers’ overall confidence in the residential market, as home prices have been on the rise this year, in spite of the pandemic. This was in line with data from a recent report by property services firm Cushman & Wakefield, which predicted that home prices will rise up to 3 percent this quarter, following a 4.3 percent year-to-date increase through September.

CK Rebuild Pipeline

The developer’s rezoning application came after its Lyos project in the Hung Shui Kiu  area of the New Territories’ sold all 200 apartments for offer in the first round of sales this month. Analysts saw sales at the project as having been buoyed by Hong Kong’s chief executive Carrie Lam’s announcement of plans for the Northern Metropolis project her annual policy address in October, according to the South China Morning Post.

As for its site in the East Fo Tan Industrial Area, which is located near Hong Kong’s Sha Tin Racecourse, the developer is “prepared to be [a] pioneer” by beginning the first phase of redevelopment, should the application be approved.

The potential approval of the project rezoning would also help CK Asset further add to its project pipeline, following its acquisition of a HK$716 million residential site through a government tender in August.