CK Asset bested four other local tenderers to win the final residential plot on the former Kai Tak airport runway with a bid of HK$10.28 billion ($1.33 billion), Hong Kong’s government announced on Wednesday.
The property development arm of Li Ka-shing’s business empire, now chaired by son Victor Li, shouldered aside four rival bids representing five of Hong Kong’s largest developers to win the 117,843 square foot (10,948 square meter) site, the Lands Department said in a release.
The price represents a 22 percent premium to the HK$13,009 per square foot paid by mainland developer COLI for a Kowloon-facing runway plot last December, with analysts indicating that the site’s prime location, and a recent revival of the housing market may have helped inspire CK Asset’s bid
A Harbour View Premium
The harbour-facing parcel, known as New Kowloon Inland Lot No.6604 at Kai Tak Area 4E Site 2, will yield a maximum gross floor area of 648,138 square feet, meaning the developer is paying about HK$15,860 per square foot of housing.
CK Asset described the plot, located at the forefront of the Kai Tak runway, as a “unique” site.
“It is the only corner site which is situated at the harbour front and is adjacent to the forthcoming metro park,” CK Asset’s chief corporate affairs officer, Wendy Tong Barnes, told Mingtiandi. “We look forward to developing a high-quality downtown luxury residential project on the site.”
The winning bid was slightly higher than market expectations, reflecting the strong confidence of developers in the Kai Tak residential market, said Thomas Lam, executive director and head of valuation and advisory at Knight Frank in Hong Kong.
“It is estimated that mainly medium-sized units will be developed at the site,” Lam said. “They are expected to be sold at around HK$28,000 per square foot upon completion, with a total investment of about HK$13.5-14.5 billion.”
Wheelock and Company’s Monaco project in Kai Tak enjoyed a respectable market debut in January, despite the COVID-19 pandemic. After marking down units in the luxury project by 15 to 20 percent when it was launched in the middle of last month Wheelock sold all 145 units made available on the opening weekend.
Also entering solo bids for this latest Kai Tak site were local heavyweights K Wah International, Sino Land and Sun Hung Kai Properties, with Wheelock and Company teaming up with Causeway Bay-based Hysan Development in a joint venture tender.
The five bids for the plot were fewer than expected by market watchers. Unlike in December, mainland firms skipped the tender entirely, with many of China’s largest developers having reined in spending since the central government revealed its “three red lines” regulations in August aimed at reducing risk associated with debt-laden builders.
“The large lump sum involved may be one of the reasons which limited the bidding interest of mainland developers in the recent land sales,” said Dorothy Chow, senior director of valuation at JLL in Hong Kong. Chow estimated that at a unit size averaging 800 square feet by gross floor area, the site would yield 700 to 800 homes.
The JLL valuation expert also pointed out that CK Asset has fewer projects in its pipeline than some of its competitors, which could provide extra motivation for the developer to replenish its land bank.
Cause for Optimism
City officials in late December declared their intent to sell five new sites by the end of March, including the Kai Tak plot sold this week and a Mansfield Road site in the posh Peak district.
Earlier this month, a Wharf Holdings-led consortium won a Lands Department tender for the Mansfield Road site with a HK$7.25 billion bid. The successful acquisition was announced just 48 days after the developer controlled by billionaire Peter Woo had won the rights to an adjoining site, with the two plots together allowing for development of up to nearly 404,000 square feet of housing.
The string of successful land sales, together with strong buyer turnout for new apartments to start the year, suggests rising spirits after a period marred by COVID-19 lockdowns and civil unrest in the city.
“The upsurge in the stock market since the beginning of 2021 and the positive responses to new residential projects recently launched in Kai Tak and Lohas Park are good signs beaconing that investors are becoming more optimistic,” said KB Wong, executive director and head of valuation and advisory services at Cushman & Wakefield in Hong Kong.