Goldin practised a HK$25 mil touch-and-go in Kai Tak
Goldin Financial is abandoning its HK$11.1 billion ($1.41 billion) purchase of a commercial site on the former runway of Hong Kong’s Kai Tak airport, citing the city’s economic and social instability as motivation for its decision.
The aborted land buy will cause the Hong Kong-listed property and finance firm to forfeit a HK$25 million deposit which it paid on the land, just one month after besting some of the city’s biggest developers to make the largest bid ever for a site in the former airport area.
In a statement to the exchange, Goldin was explicit in its explanation that the company’s directors had made their decision to walk away from the plot purchase due to changes in market conditions, with the company’s chairman, Pan Sutong dismissing reports that his firm lacked the financing to complete the land purchase in a call with the media.
Pan Dismisses Reports That Goldin Lacks Cash for Land Buy
Goldin, which is one of the biggest developers in Tianjin but a role player in the Hong Kong market, surprised many analysts when it outbid Hong Kong heavyweights Sun Hung Kai Properties, Wheelock and Company, Great Eagle Holdings, CK Asset Holdings and Sino Land to win the 863,157 square foot (80,189 square foot) commercial project.
Goldin boss Pan Sutong denied reports that his company lacked the cash to follow through on the land purchase
Today, the developer was pointed in asserting that it had not bitten off more than it could finance, when it agreed to pay the equivalent of HK$12,888 per square foot of gross floor area for the project.
“I would submit a personal bid if the government offered the commercial site for tender in future,” Pan was cited by the South China Morning Post as saying in a conference call. “It is a joke if market talk suggests the deal collapsed because of difficulties in arranging loan financing. Construction of the [company’s] other residential sites in Kai Tak and Ho Man Tin would continue.”
Last November Goldin had paid HK$8.9 billion to buy a 104,496 square foot plot in Kai Tak for a 53,394 square metre residential project, and in 2016 the company had paid HK$6.38 billion for a residential project at the Ho Man Tin MTR station in Kowloon.
A mainland native, Pan, whose personal wealth is estimated by Forbes at $4.9 billion, made his fortune first in electronics and later moved into property development.
Goldin Discovers Hong Kong Challenges After Record Land Buy
With crowds estimated at from 500,000 to over 1 million people having gathered to protest a proposed extradition law last weekend in Hong Kong, and stories of trade wars dominating the headlines in the financial hub, Goldin’s board seems to have seized on these themes as rationale for their land buy about-face.
At an urgent board meeting called on 10 June the directors voted to stop the purchase of Kai Tak 4C Site 4, despite having been informed that the company would lose its deposit.
At the meeting, executive directors Zhou Xiaojun, Huang Rui and Hui Wai Man, as well as independent non-executive directors Abraham Shek Lai Him, Tang Yiu Wing and Joseph Wong Wai Leung are said to have decided that “the occurrence of recent social contradiction and economic instability would have negative impact on the growth of Hong Kong commercial property market,” in voting to abandon the land purchase.
Pan Sutong is said to have voted against the resolution to abandon the site buy, which had been put forward in a resolution from Abraham Shek Lai Him, a pro-Beijing lawmaker in Hong Kong’s legislative council.
With pressure from China’s worsening trade relations with the US having been a year-long theme in Hong Kong, and controversy over the extradition law already having brought LegCo members to blows before Goldin’s land purchase last month, the statement from the company did not specify what changes in Hong Kong’s environment over the last 30 days had precipitated its costly about-face.
According to Hong Kong regulations, the 115,088 square foot Kai Tak site, which is approved for construction of a commercial building with a hotel of up to 800 rooms, will be returned to the city for auction at a later date.
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