New World Development has purchased its second commercial site within three months in Hong Kong’s Cheung Sha Wan area, bringing its total land purchases in the Kowloon neighborhood to HK$11.8 billion ($1.5 billion) since mid-February.
The top Hong Kong developer has agreed to pay HK$4.03 billion ($517 million) for a 4,171 square metre (45,000 square foot) land parcel which is approved for development of up to 50,052 square metres (539,000 square feet) of commercial space, according to an announcement this week by the Hong Kong Lands Department, which auctioned off the project.
New World’s pair of 2017 Cheung Sha Wan bets come as rising property prices in the city continue to drive developer interest in western Kowloon, including record high prices for sales of existing commercial space in the area. The developer, which already has a Kowloon land bank of over 390,000 square metres (4.2 million square feet) according to its website, is paying the equivalent of HK$80,476 per square metre (HK$$7,476 per square foot) of future commercial space.
Eight Bidders Without a Mainlander in Sight
To bring in its second Cheung Sha Wan prize, New World outbid a host of other developers, including fellow Hong Kong heavyweights Sun Hung Kai Properties, Cheung Kong Property Holdings, Wheelock Properties, and a joint bid between Sino Land and K Wah Properties. While mainland developers have played a growing role in Hong Kong land auctions over the past few years, the names of China’s largest builders were notably absent from the eight companies tendering for the project.
New World made the bid for New Kowloon Inland Lot No. 6582, which is located at Lai Chi Kok Road near Cheung Shun Street in Cheung Sha Wan, through a subsidiary named Good Sense Development Limited. The company purchased the site on the basis of a 50-year land grant.
Cheung Sha Wan Gains Favor as Property Prices Rise
New World will be adding the Lai Chi Kok Road site to a project that it purchased on King Lam Street in Cheung Sha Wan in February. In that acquisition, the developer paid HK$7.8 billion for a 7,728 square metre (83,184 square foot) parcel that would yield 92,737 square metres (998,210 square feet) of commercial space.
Both of the company’s new commercial sites are near the Lai Chi Kok station on the Hong Kong MTR’s Tsuen Wan line.
Grade A office rental rates in Hong Kong’s Central district rose by more than 13 percent last year according to research by JLL, which has helped to spark interest among developers and occupiers for alternative commercial locations, including Cheung Sha Wan.
Mainland shipping conglomerate China Shipbuilding Industry Corporation (CSIC) set a new price record for West Kowloon of around HK$19,000 per square foot last month when it paid HK$259 million ($33.3 million) for two floors in a Cheung Sha Wan development that shares a metro station with both of New World’s recent site purchases.