Goldin Agrees to Sell HK$8.9B Kai Tak Plot

Goldin Financial has agreed to sell a once-prized residential site at Hong Kong’s former airport, after accepting an offer from an undisclosed party for the undeveloped Kai Tak plot, the company announced to the stock exchange on Tuesday.

The Hong Kong-listed financial conglomerate confirmed in its bourse filing that it has accepted a conditional offer made on 19 March for the plot known as New Kowloon Inland Lot 6591 from a “well-established integrated company principally engaged in property development and related businesses”.

Goldin, which paid HK$8.9 billion ($1.2 billion) to acquire the 9,708 square metre (104,496 square foot) site in November 2018, noted in the disclosure that the proposed transaction may or may not be concluded, and the company would make further announcements in accordance with stock exchange regulations.

Market insiders have indicated that the buyer may be from mainland China, after CK Asset Holdings – which has yet to secure a plot on the former airport – denied that it was behind the offer.

Henderson Land, New World Development, Wheelock and Company, and Empire Group Holdings – which jointly acquired an adjoining site in 2018 – have also denied involvement, according to a Mingtiandi source.

A Second Touch-and-Go in Kai Tak

Should the proposed sale be completed, it would mark the second time in a year that the company controlled by mainland billionaire Pan Sutong has reversed course on a Kai Tak project.

Just ten months ago, the company forfeited a HK$25 million deposit when it walked away from the HK$11.1 billion purchase of a Kai Tak commercial site, citing the city’s economic and social instability as motivation for its decision.

While it has not yet provided a rationale for disposing of New Kowloon Inland Lot 6591, Goldin’s announcements show that the company is entertaining the offer from its unnamed counterpart some six weeks after recording a loss of HK$482 million for the second half of 2019 across its businesses, which range from financial services to wine production.

Selling Amid a Property Slump

With Hong Kong’s property market at a standstill due to the COVID-19 pandemic, analysts are speculating that Goldin may be forced to sell the site for less than what the company had paid for it fifteen months ago.

Goldin’s winning bid had come in at the higher end of the predicted HK$8.33 billion to HK$9.2 billion range, with the company paying HK$15,497 per square foot of built area – based on the plot’s approved gross floor area of 53,394 square metres.

Property developers in the city are currently holding back on project launches amid weakening demand, as well as offering heavy discounts to lure buyers.

Last month, China Evergrande slashed prices of new apartments by 14 percent at its Emerald Bay project in Tuen Mun, while Wheelock offered discounts of up to 3 percent at Ocean Marini in Lohas Park and flats at Henderson Land’s Eden Manor in Sheung Shui were selling for 16 percent lower than list prices posted in September last year.

Sliding Rents As Employment Prospects Diminish

Values for apartments in prime locations across the city have taken a big hit, with Savills releasing a report just this week on residential leasing activity during the first quarter of the year that revealed rental values for luxury residences throughout Hong Kong recorded their largest quarterly fall in rental values since 2010 during the period from January through March.

In Kowloon – where Kai Tak is located – rents fell 7.5 percent in the first quarter of 2020 from the previous three months, and 5.6 percent from the same quarter last year.

“Most districts are seeing little demand in or out, and what activity there is relates mostly to downsizing as employment prospects dim,” said Savills’ senior director of research and consultancy in Hong Kong, Simon Smith.

Smith added that the timing of any improvement in residential rents will depend on corporate prospects in the second half of the year and the rate at which the local economy rebounds.