Hong Kong-listed Sun Hung Kai Properties announced on Friday that it had won a tender for a second plot of land near Guangzhou’s Qingsheng high speed rail station at a price of RMB 1.19 billion ($177 million).
The company controlled by the billionaire Kwok family says that it will link its newly purchased 69,677 square metre (750,000 square foot) commercial site with an adjacent commercial plot that it had acquired in May, to build a transit-oriented-development project.
The announcement by Hong Kong’s largest developer by market value came just one day after Sun Hung Kai had signalled its intent to potentially double its portfolio of properties on the mainland to 2.32 million square metres (25 million square feet) by 2023.
Linking the Greater Bay with Transit
Combined, Sun Hung Kai’s pair of Guangzhou sites are approved for construction of a gross floor area of over 325,160 square metres ( 3.5 million square feet) of commercial space on a site adjacent to Guangzhou’s metro line four, as well as to the Qingsheng Station on the Guangzhou-Shenzhen-Hong Kong Express Rail Link.
Despite these location advantages, with this new site approved for construction of up to 262,619 square metres, Sun Hung Kai paid the equivalent of RMB 4,531 per square metres of built area for the project.
The complex, which is scheduled to be completed in 2021-2022, will be located just half an hour away from Shenzhen, and an hour from Hong Kong’s West Kowloon station via high-speed train.
Guangzhou’s planned metro line 22, and the Zhinan line will also have stops near the commercial center, according to the press release.
According to a February report by JP Morgan the SHK’s management has also expressed interest in bidding for a 5.88-hectare site on top of West Kowloon’s high-speed rail station, which the government indicated last week would be up for tender before the end of June. If that project is sold as a whole, as the government now says it intends, it could be valued at close to HK$100 million.
Betting on Mainland Expansion
Sun Hung Kai’s successful Guangzhou bid comes just a few days after the company announced its plans to ramp up its investment in China, as the challenges of acquiring land in Hong Kong multiply.
The newly acquired land will increase by approximately 1.2 percent the company’s mainland land bank, which in 2018 stood at 5.86 million square metres — 77 percent of which was under development.
The Guangzhou project would also underscore the company’s recent emphasis on building commercial properties connected to transportation hubs, underlined by Hong Kong projects like the New Town Plaza at Sha Tin Station, and the PopWalk mall in Tseung Kwan O.
“We have our eyes on transport-oriented development where you have multiple railways and high-speed trains,” Sun Hung Kai executive director Adam Kwok said in remarks cited by the South China Morning Post.
Japanese Investment Bank Nomura raised by five percent its target price for SHK’s stock to HK$150 per share after the Guangzhou site purchase was made public, in spite the firm’s 32 percent year on year drop in revenue in the second half of 2018.