Hong Kong developer Chinachem Group has won a tender to develop a residential parcel in West Kowloon, according to an official announcement late last week.
The company led by CEO Donald Choi shouldered aside 16 other bidders to win the site in the city’s Sham Shui Po area for HK$912.8 million ($118 million) through a land tender conducted by Hong Kong’s Urban Redevelopment Authority (URA) which ended on 7 April.
Betting on Views and Transportation
“The project is in the heart of West Kowloon and within minutes of walking distance from MTR station,” Dennis Au, managing director for real estate at Chinachem Group said in a statement. “It has a three-sided frontage and the development will enjoy open mountain and city views.”
Chinachem outbid local giants Sun Hung Kai Properties, Wheelock and Company, Henderson Land and Sino Land, as well as 12 other local entrants, to win the rights to build 175 new homes spanning 104,087 square feet (9,670 square metres) of gross floor area, on the 11,517 square foot site.
At the land premium paid, Chinachem will be handing over the equivalent of HK$8,770 per square foot for the site within one minute’s walk of the Cheung Sha Wan MTR station — a price which analysts describe as in line with market expectations.
We will be building a sustainable development that will uplift the living environment of the community,” Chinachem’s Au said.
The parcel located at the intersection of Tonkin Street and Fuk Wing Street is zoned for residential and commercial purposes and is expected to be developed into flats ranging from 377 square feet to 670 square feet. The lower floors of the project, which is expected to be completed in 2023 to 2024, will be developed as a retail podium, according to the terms of the URA tender.
Discounts Rule in HK
Knight Frank head of valuations and advisory Thomas Lam estimates that, once finished, residential units in the project could be sold for at least HK$18,000 per square foot, while the shopping space is likely to appeal to mid-range retailers.
“Given the current events, the bid price is slightly conservative compared to previous years but within a reasonable range, considering the modest development risks of URA-led projects,” Lam told Mingtiandi.
“It also reflects steady market confidence in the property market outlook of Cheung Sha Wan, where the district is a well-established urban area that is welcomed by homebuyers,” Lam said.
Kowloon Fortunes Diverge
The Sham Shui Po sale took place three weeks after a site in Mong Kok was won by a mainland-controlled firm at a premium nearly 22 percent below market expectations.
The buyer, a unit of a Hong Kong-listed Eagle Legend Asia, is controlled by Shenzhen-based developer Kaisa Group Holdings, according to multiple sources who spoke with Mingtiandi.
The unit of the Guangdong group acquired the parcel located between Reclamation Street and Shanghai Street for HK$85.9 million ($11.1 million), or HK$3,512 per square foot of built area, which is the lowest rate recorded in the area since 2004.
Soy Street Project Downgraded
Not far from the Reclamation Street site, another Mong Kok parcel may have seen its price drop sharply in a Lands Department tender which closed on Friday.
Knight Frank lowered its predicted selling price for Plot KIL11240, a residential site at the intersection of Soy Street and Shanghai Street in the protest-torn neighbourhood, but indicated that the sale was expected to be consummated.
“We are confident in the tender of the land sale site KIL11240 on the Junction of Soy Street and Shanghai Street,” Lam said. “The chances of it being withdrawn are low.”
The property consultancy now expects that the project will sell for around HK$480 million — around 20 percent less than its previous estimate. Once completed, the Soy Street site could yield up to 50,497 square feet of homes by gross floor area, making Knight Frank’s latest estimate equivalent to HK$9,506 per square foot.