Hong Kong’s real estate market has been going vertical for more than two years, and a government auction for a site in the city’s loftiest residential area is expected to stoke competition among developers from across greater China hoping to sell homes to billionaires.
In a tender scheduled to close on October 11th, the city’s Lands Department is selling a site on Mansfield Road on the south side of Victoria Peak that could see builders bid as much as HK$32.3 billion ($4.1 billion) for the right to build 37,561 square metres (404,300 square feet) of luxury housing.
“(The site will) attract all the key players in Hong Kong and mainland China as the future land and housing supply in the area is very limited,” said Thomas Lam, a senior director at Knight Frank in Hong Kong. The site tender comes shows good timing for a government that relies on land sales for much of its revenue, after the directors of Shenzhen developer Hongrongyuan Property Group recently paid a record-breaking HK$3 billion for a house on Barker Road just around the mountain from the tender site.
New Homes Could Sell for HK$150K PSF
Properties near the site on Mansfield Road are currently selling for around HK$100,000 to HK$150,000 per square foot, according to Denis Ma, head of Hong Kong research at JLL, and are particularly prized for their views of the sea south of the island. Properties nearby are mostly low-rise apartments blocks and super-luxury housing, including the residence of Secretary for Justice Teresa Cheng.
According to Lands Department documents regarding the tender, the new owners of the plot occupying 2, 4, 6, 8, 9, and 11 Mansfield Road will be allowed to develop up to a height of 13 storeys and are permitted a maximum gross floor area of 37,561 square metres.
With a price per square foot for the land estimated at HK$65,000 to HK$80,00, Knight Frank values the site at HK$26.3 billion to HK$32.3 billion, Lam said. The property consultancy estimates total development cost for the site, including the cost of land and construction, will be around HK$32 billion to HK$37 billion. The property advisor said he expects super-luxury houses built on the land to be sold at a minimum of HK$150,000 per square foot, while apartments could bring in around HK$95,000 per square foot.
Peak Properties in High Demand
Victoria Peak, one of the most expensive residential areas in the world, has been the home of record-breaking residential deals in the past few months. Hongrongyuan’s HK$3 billion site at 37 Barker Road, the purchase of which was revealed at the beginning of this month, is only about a five-minute drive from the Lands Department’s site at Mansfield Road, with the Shenzhen family having paid around HK$147,059 per square foot for their piece of the Peak.
In July of this year, Macau gambling heiress and Shun Tak Holdings managing director Pansy Ho reportedly purchased a luxury house at 28 Gough Hill Road on the Peak for HK$900 million, paying the equivalent of HK$161,000 per square foot for her posh new pad.