Wheelock Wins New Territories Residential Plot With $540M Bid

Hong Kong’s northern New Territories continues to command above-market land prices, particularly in the hotspot of Kwu Tung, where Wheelock Properties on Wednesday topped 11 rival bids to win a development site for HK$4.19 billion ($540 million).

The site, known as Fanling Sheung Shui Town Lot No.278 at Area 24, is on a 50-year land grant and can yield a maximum gross floor area of 492,390 square feet (45,745 square metres), meaning Wheelock is paying HK$8,499 ($1,093) per square foot of built area.

The developer’s winning bid surpassed market expectations, according to local valuers, and signalled ongoing conviction in the health of the financial hub’s residential market amid surging home sales for most of 2021.

“While the past few plots have all been sold at very satisfactory prices, this reflects that developers are very confident in the future of the Kwu Tung area,” Thomas Lam, executive director and head of valuation and advisory at Knight Frank in Hong Kong, told Mingtiandi.

Wheeling and Dealing

According to a government announcement, Wheelock bested a who’s-who of Greater China developers in scoring the Kwu Tung North parcel. The 12 total bids included offers from Henderson Land, CK Asset, Kerry, Vanke, Kaisa and Sun Hung Kai, the last of which in April had paid HK$7,184 per square foot for an adjacent plot, known as Area 25, or about 40 percent higher than the market valuation.

Wheelock’s bid represents an 18.3 percent premium to the amount paid by Sun Hung Kai for its slice of Kwu Tung, an area whose appeal is growing because of improved transport links such as a new MTR station set to begin construction in 2023 and finish in 2027.

Wheelock Properties chairman Stewart Leung told local news website HK01 that the Kwu Tung project near the mainland border would make full use of the company’s experience in building new communities and draw on the advantages of the Greater Bay Area to develop Kwu Tung North into the next high-quality community.

Ricky Wong, managing director of Wheelock, said the firm plans to develop small and medium-sized units suitable for small families at a total investment between HK$7 billion and HK$8 billion.

Wheelock’s latest land buy comes three months after winning the right to build apartments at Wong Chuk Hang MTR station, as the developer shows further confidence in the city’s residential market amid political ructions and the on-and-off COVID-19 crisis.

The developer’s bid for the 503,750 square foot site in southern Hong Kong Island topped those put in by CK Asset, Sun Hung Kai, Henderson Land, K Wah and a venture between Kerry Properties and Sino Land.

Blurred Lines

A third residential site in Kwu Tung sold for HK$2.62 billion, or HK$9,208 per square foot, to Wing Tai Properties in June, the South China Morning Post reported.

The boom in Kwu Tung exemplifies what property consultancy JLL calls the “diminishing geographical boundary” between Kowloon and the New Territories.

Newly launched projects in the New Territories in 2020 were 21 percent lower in unit price than those in Kowloon, narrowing from a 42 percent gap in 2011, JLL said in its Residential Sales Market Monitor for Hong Kong.

“With a more comprehensive railway network in the city, the distance factor affecting home prices is diminishing owing to the significantly shorter travelling time between the New Territories and urban districts,” said Joseph Tsang, chairman at JLL in Hong Kong. “Thus, the price gap of residential properties between the two regions is narrowing over the past 10 years.”

In a recent review of Hong Kong’s investment market, Cushman & Wakefield predicted that projects springing up in Kwu Tung, as well as the nearby Lok Ma Chau Loop and Hong Kong-Shenzhen Innovation and Technology Park, would lead developers to pay increasing attention to the area in the next few years.