Hong Kong’s MTR Corporation has awarded the rights for the fifth phase of property development at Wong Chuk Hang metro station to a consortium of four local developers, reportedly for a lower premium than was paid in the fourth-phase tender.
The transit operator and landlord announced on Wednesday that Kayson Ltd — made up of New World Development, Empire Development Hong Kong (BVI), CSI Properties and Lai Sun Development — bested five other bids to win the tender for a residential project at The Southside, a development area just south of the station on the South Island Line.
The lukewarm response to the latest housing project to be developed along Hong Kong’s South Island MTR line comes despite developers in the city being expected to sell as many as 1,500 homes in January — more than double the 626 sold a year earlier. In 2020, Chinese New Year fell during the first month of the year, but the COVID-19 pandemic had yet to shake the city.
Ready for More Than 1,000 Homes
The MTR’s latest project in Wong Chuk Hang, which takes over the site of a disused depot, has a maximum gross floor area (GFA) of 636,147 square feet (59,100 square metres), providing up to 1,050 residential units averaging 600 square feet. The buyers will pay the government HK$6.44 billion ($830 million), or about HK$10,123 per square foot.
In common with earlier projects in the gentrifying former industrial area, the New World-led group will need to hand over 25 percent of any profits derived from the eventual sale of homes developed on the site to MTR.
The tender attracted 37 expressions of interest, with local developers Sun Hung Kai Properties, CK Asset Holdings, K Wah International and another two consortia submitting tender offers to compete with the winning bidder.
New World and CSI previously participated, respectively, in MTR’s property developments at Tai Wai station in the New Territories and the Yau Tong Ventilation Building in Kowloon, the corporation said.
Five Down, One to Go
The latest project is the fifth of six planned for the Wong Chuk Hang site and follows the fourth-phase tender in October 2019 won by a consortium formed by Kerry Properties, Swire Properties, and Sino Land.
That trio of local developers was reported to be paying a HK$6.76 billion premium for a plot with a maximum GFA of 638,305 square feet, or HK$10,587 per square foot. Despite being conducted amid the uncertainty of Hong Kong’s social unrest, the MTR achieved a price per square foot that was about 4.4 percent more than the rate which the New World-led consortium is paying just over a year later.
The 2019 purchase cleared the way for development of two apartment blocks comprising a total of 800 units, which are expected to be completed in 2025.
In August 2018, Li Ka-shing’s CK Asset won a tender for the third portion of the Wong Chuk Hang project after it agreed to pay a reported land premium of HK$12.97 billion for the 240,900 square foot site.
MTR sold phase two of the project to a joint venture of Kerry and Sino Land in December 2017 after selling the first slice of the site to a joint venture of 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 in early 2017.
Revving Up Land Sales
MTR isn’t the only one putting up large plots for residential development. After a record-breaking sale at Victoria Peak in late 2020, Hong Kong authorities are boosting the supply of residential land coming to market in the coming months, despite ongoing uncertainty in the housing market as a fourth wave of COVID-19 roils the city.
Hong Kong’s secretary for development, Michael Wong, announced in December that the Lands Department would offer up three residential sites capable of yielding 2,240 homes during the final quarter of its financial year, which ends on 31 March. By homes yielded, that land sale plan is up by more than 20 percent from the same period in 2020.
One bellwether site set to be auctioned during the next two months is a 5,381 square foot plot on The Peak’s Mansfield Road. That luxury parcel is contiguous with a site that Wharf Holdings won on 23 December with a HK$12 billion bid, making it the most expensive housing site ever sold by the government on a price per unit area basis.