Sino Land JV Bags Kowloon Residential Site With $250M Bid

Hong Kong’s Sino Land continues to snap up Kowloon residential sites at bargain prices, with the local builder and partners China Merchants Land and Great Eagle Holdings winning a tender this week for a project in the Kai Tak area with a bid of HK$1.93 billion ($250 million).

The Sino Land-led joint venture beat five other bidders in securing the right to transform the 55,585 square foot (5,164 square metre) site — consisting of civil servant cooperative buildings nestled between Shing Tak Street and Ma Tau Chung Road — into 416,477 square feet of gross floor area with 347,061 square feet of residential space.

The accommodation value of the project, after taking into account construction costs and three lower-floor apartments reserved for displaced residents, is estimated at HK$4,694 per square foot, the Urban Renewal Authority said Thursday in a release.

“Sino is the most aggressive developer lately,” Alex Leung, chief surveyor at CHFT Advisory and Appraisal, told Mingtiandi. Leung noted that a Sino Land-led consortium had won the previous land sale in Kai Tak in September. The developer led by Robert Ng also entered the sole bid for a low-density residential site in southern Lantau Island in a tender that closed on Friday.

Below Market Expectations

In winning the plot midway between To Kwa Wan and Song Wong Toi MTR stations, Sino Land’s team bested a slate of local property giants comprising Sun Hung Kai Properties, Wheelock Properties, New World Development, K Wah International and CK Asset.

Leung said the winning bid was far below market expectations ranging from HK$5,740 to HK$6,300 per square foot made by surveying firms (including CHFT) before the 16 November closing date of the tender.

As a reference, Sino Land’s price for its plot inland from the former Kai Tak airstrip translated to HK$5,392 per square foot of potential gross floor area — which still made it the lowest figure for a Kai Tak plot since K Wah’s winning bid of HK$5,330 per square foot in a tender that ended in February 2014.

By comparison, the record high at Kai Tak is HK$19,636 per square foot paid for a harbour-facing plot on the former airport runway in a tender awarded to a consortium of China Overseas Land & Investment, Chinachem, Empire Group, Henderson Land, New World Development and Wheelock Properties in May 2019.

“For the two latest government lands in Kai Tak, the awarded developers are required to build a section of underground shopping street underneath their developments,” Leung said. “The redevelopment requirements of this URA project are comparatively simple.”

Understated Milestone

The latest project lays a new milestone as Hong Kong’s first redevelopment of aged civil servants’ cooperative buildings, said Vincent Cheung, managing director at Vincorn Consulting and Appraisal.

But he warned that Kai Tak land transaction prices have been declining recently and that abundant home inventory in the area has led developers to be cautious in bidding.

“Based on the transacted accommodation value of HK$4,694 per square foot, it is believed that the developer currently expects the asking price of the project upon completion to be no more than HK$15,000 in the future, which is somewhat different from the current asking price of new projects in the same area, which is close to HK$20,000 per square foot,” Cheung told Mingtiandi.