Local builder Lai Sun Development moved to expand its development pipeline this past week, in the midst of Hong Kong’s housing boom, as it topped 16 competing bids to win a residential site in Kowloon Tong for a price of HK$1.6 billion ($206.7 million).
Winning the 50-year land plot in the upscale residential neighbourhood required Lai Sun to shoulder aside offers from top developers including Sun Hung Kai Properties, CK Asset and Wheelock Properties by offering a premium near the top of the expected range, with Colliers International having predicted that the project would sell for HK$1.4 billion to HK$1.78 billion.
Analysts point to a lack of new supply entering Hong Kong’s booming housing market as having helped drive demand for the plot.
“There [is] limited new supply of residential units in the area, which means that most of the market activities within Kowloon Tong are from existing stock,” said Cyrus Fong, senior director for valuation and advisory at Knight Frank in Hong Kong. Fong added that the government has not sold any land in the area since 2018, and this is the only Kowloon residential site included in the government land sale program so far this year.
The developer controlled by Hong Kong billionaire Peter Lam Kin-ngok gambled on its site in northern Kowloon as prices for both luxury and mass market homes are forecast to go up by as much as 5 percent in the second half of 2021 from their mid-year level, which is driving developers in the city to stock up on land to feed the boom.
Traditional Luxury District
The property at 79 Broadcast Drive in Kowloon Tong’s Beacon Hill area was formerly occupied by the RTHK Education Television Centre and provides its new owner with a 23,864 square foot (2,217 square metre) site.
With current rules allowing for boosting the plot ratio to 3.0, Lai Sun can develop a 13-storey building measuring up to 71,592 square feet of gross floor area, according to Colliers, which would mean Lai Sun paid the equivalent of HK$22,464 per square foot of GFA for the property. The average selling price for homes in Beacon Hill during September, was HK$24,333 per square foot according to Midland Realty data.
If each new home measures around 1,500 square feet, the project could yield 50 luxury homes, said Hannah Jeong, head of valuation and advisory services at Colliers.
“In terms of pricing upon completion, we believe it will fetch HK$35,000 to HK$40,000 per square foot on [a saleable area] basis,” Jeong said. Residential property prices in Kowloon Tong are generally equivalent to the Mid-Levels in Hong Kong island, she added.
Knight Frank’s Fong noted that as a high-end market served by top-performing schools such as La Salle Primary School and Maryknoll Convent School, home prices in the area tend to outperform other parts of Kowloon.
Lai Sun Boosts Residential Portfolio
The developer’s win came as new project starts for private housing reached the equivalent of 10,577 homes in the first eight months of the year, representing a 70 percent increase from the same period last year, according to Ricacorp Real Estate research.
In the six months that ended 31 January, Lai Sun Development reported that it had two Hong Kong residential projects under development, which it had acquired through government and URA tenders.
The Hang On Street and Tai Kei Leng projects, which are expected to be completed within the next three years, will provide Lai Sun with approximately 105,900 square feet of homes to sell, with the Beacon Hill project now set to grow that pipeline by 67 percent, as measured in square feet.
In January this year, Lai Sun also added to its portfolio by joining a consortium of four local developers which successfully bid HK$6.44 billion for the rights to the fifth phase of an MTR residential project at Wong Chuk Hang metro station. That 636,200 square foot condo project is expected to deliver two towers offering 1,050 units, the developer said in its interim report.