Mingtiandi

Asia real estate and outbound investment news

  • Facebook
  • LinkedIn
  • RSS
  • Twitter
Sign Up / Login Logout

Lost your password?
Register
Forgotten Password
Cancel

Register For This Site

A password will be e-mailed to you.

  • Capital Markets
  • Events
    • Mingtiandi 2023 Event Calendar
    • Mingtiandi APAC Residential Forum 2023
    • Mingtiandi Asia Logistics Forum 2023
    • Mingtiandi Hong Kong Focus Forum 2023
    • Mingtiandi APAC Data Centre Forum 2023
    • Mingtiandi Asia Office Strategies Forum 2023
    • Mingtiandi Singapore Focus Forum 2023
    • More Events
  • MTD TV
  • People
    • Industry Moves
    • MTD TV Speakers
  • Logistics
  • Data Centres
  • Asia Outbound
  • Retail
  • Research & Policy
  • Advertise

HK$40B Site on Victoria Harbour Could Reshape Hong Kong’s Central

2020/07/08 by Diana Li 2 Comments

Shaping-Hong-Kong-s-New-Central-Harbourfront-by-Benoy-06

New Central Harbourfront Site 3 will be the new gateway to Central (Image: Benoy)

Amid market uncertainty and sliding property values, Hong Kong is putting up for sale an iconic commercial site in the city’s busiest district, according to a recent announcement by the city government.

The 4.76 hectare (512,362 square foot) waterfront plot, named New Central Harbourfront Site 3, is surrounded by some of the city’s most famous landmarks, including the Hong Kong Observation Wheel and the IFC complex to its west. Spanning from the Central Ferry Piers in the north to Jardine House in the south, the plot could be developed into about 150,000 square metres (1.6 million square feet) of gross floor area.

“The site is arguably the most significant waterfront site globally at this time in any major city,” said Trevor Vivian, Global Director of international architectural firm Benoy, “It therefore represents Hong Kong’s greatest opportunity to bring something special and globally recognizable to complete the waterfront along Central.”

According to Thomas Lam, head of valuation and advisory for Hong Kong at property consultancy Knight Frank, the site is currently valued at HK$40 billion ($5 billion). That price equates to around HK$25,000 to HK$28,000 ($3,225 to $3612) per square foot, or about 15 percent lower than estimates for the site at the end of 2019.

Developing the site could involve a total investment of up to HK$65 billion, however, developers may consider carefully before bidding on the plot, given current market conditions.

Tricky Timing

“Now is not the best time to launch such a commercial site in Hong Kong, considering this might be one of the most expensive commercial sites to be launched in the market in the past few years”, said Vincent Cheung, managing director of Vincorn Consulting and Appraisal Limited.

Trevor Vivan Benoy

Benoy’s Trevor Vivian sees the plot as among the world’s most significant

In the most recent previous sale of a major commercial site in Central, Henderson Land in 2017 agreed to pay HK$23.3 billion (then $3 billion) to purchase the Murray Road car park project. That land buy worked out to around HK$50,064 per square foot for the right to develop around 465,000 square feet of commercial space on the site.

Should Site 3 sell within the price range predicted by analysts, it would bring a price of nearly half the rate that the Murray Road parcel less than 1 kilometre (0.62 miles) inland of the harbourfront plot sold for three years ago.

A Changed Market

That variance in price may be explained in part by the current market condition and development constraints including height restriction and design parameters, said Knight Frank’s Thomas Lam. Those conditions include the need to provide postal facilities to replace the current post office that occupies part of the site, as well as requirement regarding construction of public space.

However, there have also been changes in demand and business confidence over the past three years that may have had an impact on the site’s value.

“The market today is in a much different place than it was back in mid-2017 at the time of the Murray Road carpark site sale, and that’s likely to affect what developers bid for site 3,” Reed Hatcher, head of research for Hong Kong at Cushman & Wakefield said. “Back in 2017, the market was red hot with the expansion of Mainland Chinese firms into Hong Kong propelling office prices to record highs. In contrast, the office investment market over the past year has turned much more subdued as US-China tensions, social unrest, and the Covid-19 outbreak have all contributed to an uncertain outlook over the near-term.”

Hong Kong Post Office

The new project will take over the site of today’s post office

Average office rents in the greater Central area have dropped around 8.7 percent from HK$126.7 per square foot in the second quarter of 2017 to HK$115.7 per square foot in the most recent three month period, according to Cushman & Wakefield. Vacancy in the business district has also been on the rise, climbing from just 3.3 percent in the period from April through June of 2017 to 9.1 percent in the second quarter of this year, the agency said.

With ongoing social unrest and the pandemic disrupting the economy, the retail market also took a hit as sales in May slumped by 32.8 percent year-over-year, marking the 16th consecutive month of decline.

Under such market conditions, Lam believes that if this site is successfully sold, it will boost confidence in the property market. “We estimate about 4 to 7 developers or consortia will submit bids for the site,” said Lam, “In addition to large domestic developers, large Mainland Chinese firms will also actively participate.”

Two-Envelope Tender

According to the Hong Kong government, the buyer of the site will be required to provide a large-scale public open space and a landscaped deck spanning the project to enhance pedestrian access to the Central Harbourfront.

nicholas brooke

Nick Brooke of the ULI would like Hong Kong’s waterfront to be about more than just the money

A rare “two-envelope” approach will be adopted for the plot tender, giving both design and price proposals equal weight in evaluating the winning bid.

Last deployed in 2002 for the sale of the former Marine Police Headquarters at Tsim Sha Tsui, two-faceted approach is usually adopted in Hong Kong for iconic sites to ensure that the design of the project will benefit Hong Kong both economically and socially, according to the city government.

“For this unique site, it’s not just about money, it’s also about the importance of the site’s location,” said Nicholas Brooke, Asia Pacific Chairman of the nonprofit real estate research organization Urban Land Institute (ULI).

According to Benoy, advocates continue to push the government to give more than 50 percent weightage to design considerations in choosing a winning bid, with the final terms of the tender process yet to be released.

Building Something Memorable

“Obviously the government would like to see some highlights on the water from potential bidders,” said ULI’s Nicholas Brooke, “the bidders are also likely to integrate the site with the surrounding area to leverage its connectivity to the Exchange Square, IFC and etc.”

Winning designs could incorporate kids play areas, event spaces, landscape designs, art installations, which could make the waterfront more accessible to the public for cultural events, according to the firm. This envisages retail linked to the elevated walkway connecting central to the Star Ferry Pier with low rise office towers above.

“Hong Kong has a huge opportunity to deliver something great for the city on this site, which is memorable, and attractive to both residents and visitors,” said Benoy’s Vivian.

Share this now

  • LinkedIn
  • Share
  • Tweet
  • Email

Filed Under: Projects Tagged With: Benoy, Central District, daily-sp, Featured, highlight, Hong Kong, Nicholas Brooke, Site 3, Trevor Vivian

Comments

  1. IFC Observer says

    2020/07/09 at 3:05 pm

    Seems China is Fireselling HK.

    Btw, could you please follow up the Henderson development of Murray Rd carpark?

  2. Ming Gao says

    2020/07/09 at 3:27 pm

    It could be a firesale, but what if a buyer decides to pay above market expectations for the plot, in a move seen as a “vote of confidence” in Hong Kong. And I agree that it is time for an update on the Murray Road site. Will see what we can do 🙂

Leave a Reply

Your email address will not be published. Required fields are marked *

Get Mingtiandi Delivered

  • This field is for validation purposes and should be left unchanged.

MTD TV

Tripp Gantt, Manulife US REIT
Lendlease REIT, Manulife US REIT, JLL See Rising Competition for S-REITs
mtd tv dc forum north asia panel thumbnail
Hyperscalers Shaping Data Centre Demand in North Asia: MTD TV

More MTD TV Videos>>

People in the News

Ganen Sarvananthan
TPG Upgrades Asia Managing Partner Sarvananthan to Lead Middle East Expansion
Ronshine chairman and CEO Ou Zonghong
Asia Real Estate People in the News 2023-09-18
Claire Cormier Thielke
Hines Greater China Boss Cormier Thielke Joins Prologis to Lead Asia Investment
Kenny Lam Link REIT
Link CIO Kenny Lam Leaving Asia’s Largest REIT

More Industry Professionals>>

People in the News

TPG Upgrades Asia Managing Partner Sarvananthan to Lead Middle East Expansion

Ganen Sarvananthan

US private equity giant TPG announced this week that it has appointed Ganen Sarvananthan, one of the managing partners … Read More>>

Asia Real Estate People in the News 2023-09-18

Ronshine chairman and CEO Ou Zonghong

Director resignations at a pair of mainland China real estate companies lead this week’s list of personnel moves from … Read More>>

Hines Greater China Boss Cormier Thielke Joins Prologis to Lead Asia Investment

Claire Cormier Thielke

Hines veteran Claire Cormier Thielke has left her post as the US developer’s head of Greater China to join logistics … Read More>>

Link CIO Kenny Lam Leaving Asia’s Largest REIT

Kenny Lam Link REIT

Kenny Lam, chief investment officer for strategic investment at Hong Kong’s Link REIT, has resigned from his role after … Read More>>

More Industry Professionals>>

Latest Stories

Logos co-CEO Trent Iliffe
Logos Inks Deal with TEPCO to Develop 100MW APAC Power Network
CIFI Holdings (Group) Co. Ltd., Headquartered in Shanghai
Henderson Buying 50% of CIFI Guangzhou Project and More Asia Real Estate Headlines
MidlandGate Perth
PAG Buying Perth Mall From CPPIB-Backed Fund After Price Slides 25%

Sponsored Features

Behind the Gate: The Anatomy of a Data Centre
Flexible Solutions for China’s Commercial Real Estate Recovery
Building Property Portfolios Ready for China’s New Economy-Led Rebound

More Sponsored Features>>

Connect with Mingtiandi

  • Facebook
  • LinkedIn
  • RSS
  • Twitter

Real Estate News

  • Capital Markets
  • 2023 Event Calendar
  • MTD TV Archives
  • People
  • Logistics
  • Data Centres
  • Asia Outbound
  • Retail

More Mingtiandi

  • About Mingtiandi
  • Contact Mingtiandi
  • Mingtiandi Membership
  • Newsletter Subscription
  • Advertise
  • Terms of Use
  • Privacy
  • Join the Mingtiandi Team


© 2007-2023 China Advertising Media Ltd (Samoa). All rights reserved.

  • This field is for validation purposes and should be left unchanged.