Victor Li’s CK Asset Holdings has won the tender for a 1.5 million square foot (139,000 square metre) project in Hong Kong’s Wong Chuk Hang area, according to an announcement today by the city’s MTR Corporation, which sold the combined residential and retail site via a public tender.
CK Asset, which just last week announced plans to redevelop its Hutchison House office tower in Central, beat out four other bids to win the third of three Wong Chuk Hang sites auctioned off by the local transit operator in the past 16 months, for what is expected to be a HK$38 billion ($4.8 billion project).
Since the younger Li took over the top role at CK Asset from his father Li Ka-shing in early May, the Hong Kong-based developer has now announced more than $10 billion in new projects.
CK Asset Bets on Transit-Connected Project
“The transit-connected project, which is only two stations away from the Admiralty station transport hub, is the only one remaining on Hong Kong Island,” CK Asset executive director Grace Woo Chia-ching, said in a statement. Woo added that the price was reasonable and that the developer expects to complete the project by 2023.
CK’s new plot in Wong Chuk Hang gives it the opportunity to develop up to 1,200 new homes covering 1 million square feet of floor area, as well as a 500,000 square foot shopping centre on the plot next to the Wong Chuk Hang MTR station on the southern side of Hong Kong island.
Market analysts have estimated that total value of the project could be up to HK$37.7 billion, with finished homes expected to sell for up to HK$24,000 per square foot.
Li Continues Buying Spree
As the successful bidder, CK is believed to have paid a land premium of around HK$12.97 billion for the 240,900 square foot site atop the second stop on the MTR’s South Island Line, according to local media reports. In addition to the land premium, the terms of the tender require CK Asset to share 25 percent of the project with the MTR Corporation and to sell the completed 500,000 square foot shopping centre back to the MTR for an agreed upon price.
CK has prior experience with MTR-connected projects, having just last month completed the 970-unit Ocean Pride project in the New Territories, which was built on top of the Tsuen Wan West MTR station. The company also co-developed the Lohas Park project in Tseung Kwan O with the MTR.
The successful Wong Chuk Hang bid was announced just ten days after Victor Li announced that CK Asset would be redeveloping its Hutchison House office building in Central at a cost estimated to be as much as HK$31.8 billion to replace the current 22-storey building with a new 41-floor project.
In June the developer agreed to pay GIC and British Land £1 billion ($1.3 billion) to purchase the UBS headquarters in London.
Prized Plot Garners Few Bids
The largest real estate project offered by the MTR this year, the Wong Chuk Hang site attracted only five bids by the tender’s close on Tuesday, although a total of 36 developers had submitted expressions of interest in June.
According to the MTR Corporation’s announcement, CK’s offer bested bids by Sun Hung Kai Properties, Henderson Land Development, Chinachem Group and a consortium consisting of New World Development, Wheelock Properties, Sino Land, China Overseas Land & Investment and K. Wah International.
“It (the number of bids) is a bit disappointing and below my expectation,” Thomas Lam, a senior director at Knight Frank told Mingtiandi. Lam, who heads the valuation and consulting department at the property consultancy, said the scale of investment required for the project may have presented too big of a risk for many mid-sized developers. Lam also cited recent political friction globally, along with the vacancy tax locally, as potentially discouraging to would-be bidders.
Former Industrial Area Becomes Hot Site for Homes
Since the MTR began operating its South Island line in December 2016, real estate in the former industrial area in Wong Chuk Hang has attracted attention from investors.
In early 2017, the MTR sold the first phase of the development atop Wong Chuk Hang Station to a joint venture between China’s Ping An Real Estate Capital and Hong Kong’s Road King Infrastructure for an estimated HK$8 billion to HK$9.8 billion. Phase two of the project was won by a joint bid from Kerry Properties and Sino Land in December of last year.
The area has also found favour with commercial users with international accounting firm KPMG having reportedly signed a lease for for 150,000 square feet (14,000 square metres) of space at Swire Properties South Island Place in Wong Chuk Hang during July.