Hong Kong’s MTR Corporation, is said to have launched a tender for a lot in the New Territories that could carry a land premium of HK$2.7 billion ($344 million) in what will be Hong Kong’s largest residential estate.
The sale of the plot in Lohas Park in the Tseung Kwan O area, which is scheduled for this month, is expected to bring fierce competition from developers seeking the land needed to fuel their businesses.
Hong Kong’s already tight housing market will be still more restricted during 2019 to 2020, after the government land sale program released on February 28th cut the supply of new residential sites to be sold by city authorities by more than 40 percent compared to the most recent period.
Mega-Project Releases Latest Instalment
The parcel, scheduled to go up for sale by the end of the month, represents phase 11 of the mass residential development Lohas Park, according to remarks by MTR officials cited by the South China Morning Post.
The phase 11 plot is expected to yield up to 950,000 square feet (88,258 square metres) of homes by gross floor area, or enough to build 1,850 homes. The project is planned to be adjacent to an upcoming shopping centre, which would be the only major retail facility in the development, Knight Frank executive director Thomas Lam told Mingtiandi. Once completed the two properties could be expected to create new urban synergies, Lam explained.
Upon completion in 2025, the Tseung Kwan O development in the New Territories will become the largest single residential estate in Hong Kong, with 58,000 residents in 21,500 units.
Building a Transit Oriented Development in The New Territories
Built on reclaimed land near the Tseung Kwan O landfill, Lohas Park has been designed by the MTR, which sets up property joint ventures with developers to finances its rail projects, as an eco-friendly community near the waterfront which will be filled with green spaces, cafes, pedestrian flyovers, retail and easy access to the city’s expansive metro system.
The MTR has so far sold 10 lots in the development. After the sale of this lates project, the rail operator it will have three parcels remaining to sell.
“The phase 11 project has sufficient scale to achieve a critical mass, developers would be interested given there are not any other sites in the nearby area through a government tender in this coming year,” said Lam.
Vincent Cheung, a veteran property surveyor, predicted that more than 10 private developers will bid for the site, according to the SCMP.
Cheung estimated that the development would incur an investment cost of HK$11.4 billion (US$1.45 billion), or HK$12,000 per square foot. That includes HK$2.4 billion, or HK$2,500 per square foot for the land premium price, which would be about 10 percent higher than the 10th phase, won by Hong Kong developer Nan Fung in 2016.
“Lohas Park has established a neighborhood through the previous phases of the development. As the area matures, the entire Lohas Park will benefit,” said Lam.
Lowest Land Supply in a Decade
Flats at Nan Fung Development’s LP6 development, or phase 6 of Lohas Park, sold at an average price of HK$16,000 per square foot after discounts in October 2018. Seven months earlier, Wheelock & Co had sold all 750 its apartments the Malibu complex in Lohas Park in a single weekend at an average price of HK$15,000 per square foot.
MTR said that it will progressively roll out four addiitional residential sites for tender this year. These are planned to include phase 12 at Lohas Park, and others at Ho Man Tin, Wong Chuk Hang and Yau Tong stations, providing a total of 4,200 homes.
The Hong Kong government’s latest land sale program, which covers the remainder of 2019 and the first quarter of 2020, comprises a total of 15 residential sites, capable of yielding about 8,850 homes. The amount is the lowest in a decade.