A plot in Hong Kong’s Repulse Bay area has attracted a record high price for a residential site sold at government auction, with local developer SEA Holdings besting eight competing bids with a HK$1.19 billion ($152.3 million) tender.
The Hong Kong-listed developer now owns the right to develop up to 19,055 square feet (1,770 square metres) of luxury housing on the site near Repulse Bay beach in one of the most exclusive neighbourhoods on Hong Kong island’s south side, with the winning bid equivalent to just over HK$62,355 per square foot of accommodation, Hong Kong’s Lands Department announced on Tuesday.
“Located in one of the most prestigious locations in Hong Kong, the supply of this kind of site is very limited and the transaction record in the area has already shown that buyers are willing to pay sky-high prices for luxury homes in Repulse Bay,” said Martin Wong, head of research and consultancy for Greater China at Knight Frank.
The record tender comes after a recent Knight Frank report predicted that prices for luxury homes in Hong Kong would rise up to 5 percent this year with a home at Wheelock and Nan Fung’s Mount Nicholson project having sold for HK$137,872 per square foot last month, and developers have stepped up purchases of sites in high-end areas.
Pricier Than the Peak
Analysts attributed the price paid for the site, Rural Building Lot No 1203, both to its location in a neighbourhood favoured by billionaires and movie stars, and to the limited scale of the project, which brought it within the budgets of a wider array of potential bidders. The Hong Kong government had launched the tender for the site in December with bids due last week.
“Repulse Bay area is a famous luxury area,” said Alex Leung, senior director at local surveying firm CHFT Advisory and Appraisal Limited. “The subject site is unique as it is only about two minutes walk from Repulse Bay Beach, a landmark in Hong Kong.” Leung added that nearby amenities such as luxury shopping centre the Pulse, add to the plot’s appeal.
Vincent Cheung, managing director at property consultancy Vincorn Group estimated that, given its limited size and restricted plot ratio for the 21,173 square foot site, the project could yield as few as four or possibly five fully detached homes, and said that he expects that the selling price of the villas upon completion would be from HK$100,000 to HK$110,000 per square foot.
SEA Holdings’ purchase of the site on South Bay Road outstrips the previous record price per square foot of space paid at a government land sale which was set when Wharf Holdings in December 2020 agreed to pay the equivalent of HK$46,300 per square foot for a site along Mansfield Road on Victoria Peak.
To win the Repulse Bay site, the mid-sized developer beat out offers from listed heavyweights including Sun Hung Kai Properties, CK Asset Holdings, Sino Land, Hang Lung Properties, K Wah International, and Great Eagle Holdings. Mainboard-listed Emperor International Holdings and privately held K&K Property Holdings also joined the contest.
South Side Experience
“The overall investment yield of luxury homes in Hong Kong is relatively low, the yield may be as low as 1 percent to 1.2 percent, but we still anticipate a high capital appreciation of such type of development especially after the reopening of the borders between HK and mainland China,” Vincorn’s Cheung added. He also noted that SEA Holdings had indicated an interest in developing the project for investment purposes and leasing out the finished homes.
Helmed by tycoon Lu Wing Chi and his CEO-son Lambert Lu, SEA Holdings already has some experience with the value of high-end sites on the south side of Hong Kong island. More than two decades ago the company developed 1 Shouson Hill Road East, a villa project on Shouson Hill, where a home traded last July for more than HK$91,000 per square foot and a nearby unit in the same project sold for HK$79,036 per square foot during the same month.
The company also owns the Crowne Plaza Hong Kong hotel in Causeway Bay and the Winway Building on Wellington Street in Central. Overseas, SEA Holdings has 20 Moorgate and 33 Old Broad Street, both of which are office buildings in the city of London.
While overall sales of luxury homes slid in the fourth quarter of last year, according to agency data, a home at Mount Nicholson set a new price record in November when it sold for HK$140,800 per square foot, with the buyer said to be an heiress from mainland China.
The hope for a return of mainland luxury buyers has also been linked to recent luxury site purchases on Hong Kong island including Lai Sun’s HK$1.3 billion January acquisition of a project in the Mid-Levels and Nan Fung’s purchase of a set of homes in Jardine’s Lookout that same month for HK$1 billion.