The Hong Kong unit of China’s CITIC Group has picked up a 41,763 square foot (3,880 square metre) residential site in Hong Kong’s New Territories through a government land sale with a lowball bid of of HK$1.1 billion ($140.6 million), according to an announcement on Tuesday this week.
CITIC Pacific’s winning tender translates to HK$4,389 per square foot, which was 8 percent below general market expectations of around HK$4,788 per square foot of permissible housing area, according to analyst sources who spoke with Mingtiandi.
While the Kwai Chung plot is designated primarily for residential development, the successful tenderer is also required to build a set of public facilities, including a public transport terminal for light bus routes and a community centre at its own expense, according to the conditions of sale set by the Hong Kong Lands Department.
Once completed, the entire project – including public facilities – could be worth up to HK$3.4 billion, said Alex Leung, senior director at CHFT Advisory and Appraisal.
Kwai Chung Flats
The site known as Kwai Chung Town Lot (KCTL) No. 515 is the first residential parcel to be sold in the neighbourhood in seven years, according to a land sale update published by Colliers, which noted that the property is located about a five minutes’ drive from the Lai King MTR station, and is served by public light buses along Lai Kong Street.
The tract, which had been rolled over from the 2021-22 Land Sale Programme, could yield up to 250,586 square feet of housing, with Leung expecting the winning developer to build more than 300 flats, based on an average home size of 600 square feet. Each unit in the project could sell for about HK$11 million on average, said Leung.
Aside from CITIC Pacific, the tender attracted eight competing bids from developers including Hong Kong listed heavyweights Wheelock Properties and Sun Hung Kai Properties. According to the conditions of sale, CITIC Pacific is required to complete the development by 31 March 2029.
Private residential supply has remained low in the Kwai Chung area over the past decade, with just one new development completed, said Colliers. Homes in that 2018-vintage project, Edition 178, have sold for prices from HK$18,000 to HK$22,000 per square foot of saleable area, according to the property firm.
Following last week’s lukewarm tender for a site in Kennedy Town, which Grand Harvest (HK) Development won with a bid of about HK$9,500 per square foot, CHFT lowered its valuation for the Kwai Chung plot to between HK$900 million and HK$960 million, or about 23 percent less than its earlier estimate, said Leung.
The unit rate for that Hong Kong Island parcel represented the lowest price per square foot for a Hong Kong Island government site in the past eight years, according to local media.
Before tender results for the Kennedy Town site were released last week, Leung noted that CHFT’s estimate for the Kwai Chung land sale had been in the range of HK$1.15 billion and HK$1.2 billion.
CITIC Pacific’s bid for the Kwai Chung site comes to 34 percent less per square foot than the price paid at the last government land sale in the district in 2015. In that deal for a tract on Hing Fong Road, which would later become the Edition 178 residential project, the winning bidder paid HK$6,702 per square foot of accommodation, albeit for a site with more favourable access to the city’s MTR rail network, said Colliers.
“I anticipate that prices for land parcels in the New Territories, which are not located along the MTR line, will further plummet,” said Vincent Cheung, managing director at Vincorn Consulting and Appraisal.
More Housing for CITIC
With mass home prices in Hong Kong having fallen 3.7 percent over the three months ended September, CITIC Pacific is adding a third project to its residential pipeline in the city as it continues to develop a luxury project in Jardine’s Lookout, and a 50-50 joint venture with developer HKR International (HKRI) in Discovery Bay.
In September the Hong Kong-listed company was among 17 contenders which submitted bids for a residential site in the New Territories’ Sha Tin, which Wing Tai Properties Limited and China Vanke acquired with a HK$786.4 million bid.
In January of this year, the JV between HKRI and CITIC Pacific said they would add a nineteenth phase to the Discovery Bay development on Lantau Island by investing HK$15 billion to build 1,400 new homes. Plans were revealed four months after HKRI paid a HK$5.24 billion land premium to modify the designated land use for a 699,660 square foot plot in the northern stretch of Discovery Bay to allow for “residential, commercial and other” purposes.
Construction for that phase began in February 2022, and foundation work is expected to be completed by 2023, said HKRI in an interim report for the six months ended September.