New World Development has picked up its third commercial site this year in the Cheung Sha Wan area of Hong Kong for HK$2.97 billion ($380 million), bringing its total 2017 land purchases in the Kowloon neighbourhood to HK$15 billion ($1.92 billion).
The Hong Kong property group outbid eight competitors to secure the 2,873 square metre (30,925 square foot) site earmarked for office or retail development, according to an announcement by the Hong Kong Lands Department, which auctioned off the project.
The competitive land sale is another sign of confidence in the Cheung Sha Wan market, part of the emerging Kowloon West business hub.
New World Pays Top Dollar for Kowloon Site
The purchase price equated to HK$7,995 ($1,022) per square foot, which was at the upper end of market forecasts ranging from HK$7,000 to HK$8,000 per square foot. The site, which is designated for non-residential use excluding hotel, petrol station and residential care home, is approved for a total gross floor area of 34,476 square metres (371,097 square feet).
Hong Kong developers including Cheung Kong Property, Sino Land, Sun Hung Kai Properties and Wheelock dominated the auction, with the mainland companies that have dominated the city’s residential land buys continuing to steer clear of commercial projects. New World bid on the site through its wholly owned subsidiary Bonson Holdings.
The site, New Kowloon Inland Lot No. 6572, is located at the intersection of Wing Hong Street, Yu Chau West Street and Wing Ming Street amid a cluster of industrial buildings. New World’s nearly HK$8,000 per square foot bid for the parcel is said to be a reflection of optimistic market sentiment as well as the site’s proximity to MTR stations including the Lai Chi Kok station, about a five-minute walk away.
New World the King of Kowloon West
This latest site purchase makes New World this year’s dominant player in an up and coming area with the developer having bought up all three sites made available in the area at government auction.
In May, New World agreed to pay HK$4.03 billion ($517 million) for a nearby site, New Kowloon Inland Lot No. 6582. The 4,171 square metre (45,000 square foot) parcel at Lai Chi Kok Road is approved for development of up to 50,052 square metres (539,000 square feet) of commercial space.
And in February, New World shouldered aside eight rivals to win a commercial site at King Lam Street, New Kowloon Inland Lot No. 6505, located two blocks west of the just-acquired site at Wing Hong Street. New World paid a higher-than-expected price of HK$7.794 billion for the parcel that will yield a maximum gross floor area of 92,736 square metres (998,210 square feet).
In total, New World has invested nearly HK$15 billion to snap up commercial sites in the neighbourhood this year, yielding a total gross floor area of over 177,000 square metres (about 1.9 million square feet).
Cheung Sha Wan’s Bid to Become a New Downtown
Cheung Sha Wan and Lai Chi Kok comprise the Kowloon West submarket, where around 2.5 million square feet of office space is expected to come online between 2018 and 2022, according to a March report by DBS Group. Among the new office buildings in the area, China Shipbuilding Tower at 650 Cheung Sha Wan Road and The Agora at 55-57 Wing Hong Street are scheduled for completion this year and late next year, respectively.
Mainland conglomerate China Shipbuilding Industry Corporation (CSIC) purchased the top two floors of the former property for around HK$19,000 ($2,440) per square foot in May, setting a price record for Kowloon West.