A prime commercial site in Hong Kong’s Central area may sell for up to HK$11 billion ($1.41 billion), after drawing nine bids from local developers in a tender that closed on Monday.
The city’s Urban Renewal Authority (URA) announced that it was considering the tenders received after it invited a total of 27 property groups to bid on Site C of the Peel Street / Graham Street redevelopment scheme. The 2,685 square metre (28,901 square foot) site is bounded by Graham Street, Gage Street and Cochrane Street, less than 500 metres west of the Central MTR station.
Located in Shueng Wan, the site is approved for construction of office, hotel and retail space totalling up to 40,275 square metres (433,516 square feet), plus at least 1,310 square metres (14,101 square feet) of public open space, and has a target completion date of 2021.
Hong Kong Tycoons Square Off for Central Site
The bidders for the site include leading Hong Kong developers such as Li Ka-Shing’s CK Asset Holdings (formerly Cheung Kong Properties) , Sun Hung Kai Properties, New World Development, Wheelock Properties, Henderson Land, Kerry Properties, and Great Eagle Holdings, along with a joint bid by Wing Tai Properties, Sino Land, and Lifestyle China.
Although the sizes of the bids were not disclosed, property consultants expect the site may haul in between HK$8.2 billion ($1.05 billion) and HK$11 billion ($1.41 billion), according to an account in the South China Morning Post. This equates to a price of between HK$19,000 and HK$24,000 per square foot – well short of the record-breaking HK$50,064 per square foot of gross floor area that property giant Henderson Land paid for the Murray Road car park site in May.
The overall URA redevelopment project is divided into three sites, which have been offered in phases. The first phase, confusingly named Site B, was awarded to billionaire tycoon Li Ka-shing’s Cheung Kong Holdings in 2012. Construction of a residential project on the 1,690 square metre (18,191 square foot) plot is underway.
This past March, Hong Kong developer Sino Land outbid 20 other developers for Site A, an 890 square metre (9,580 square foot) parcel on which it will build a high-end residential project offering 116 flats, targetted for completion by 2021. Sino Land paid an undisclosed amount for the parcel.
The overall redevelopment effort in the former location of Hong Kong’s oldest wet market is slated to offer 68,533 square meters of total gross floor area, with 293 flats and 44,575 square meters of commercial space. For Site C, the URA stipulated that the buyer must preserve the Wing Woo Grocery building within the parcel – a historical structure dating back to 1879 that was home to a retail shop for over 80 years.
Mainland Developers Don’t Dig HK Commercial Projects
The tender for the coveted site follows five months after Henderson scooped up the first commercial site to go on sale in Central since 1996, paying HK$23.3 billion ($3 billion) for the 31,000 square foot (2,880 square metre) site. As with other commercial auctions this year, the bidding for the Murray Road site was dominated by Hong Kong firms with Chongqing’s CC Land the only developer from north of the border to make a solo bid for the site.
The competition for the Peel Street site sees the mainland and Hong Kong developers continuing in their established roles, with the companies behind all nine bids being based in the city.
Mainland developers have been far hungrier for housing land in Hong Kong, shelling out over HK$44 billion ($5.6 billion) to purchase all of the residential plots auctioned across the city in the first half of 2017 until Sino Land bought a prime site in Ma On Shan in July for HK$1.38 billion ($176.7 million).