A government tender for a commercial site in Hong Kong’s Kowloon East is set to close this Friday, giving developers an opportunity to win the rights to build a HK$1.8 billion ($229.4 million) retail project in Kwun Tong, spanning as much as 139,243 square feet (12,936 square metres) of floor area upon completion.
The site on Anderson Road, known as Lot 1078 in Survey District 3, is expected to bring in tenders running from HK$560 million to HK$900 million, according to Alex Leung, senior director at CHFT Advisory and Appraisal, with the wide range of expectations reflecting growing uncertainty in the market amid the city’s current economic downturn and rising interest rates.
With the property expected to be developed into a community shopping mall, the winning bidder is required to complete its project by 30 June, 2028, according to the conditions of the tender.
The plot is the first of a pair of commercial sites in an area known as the Anderson Road Quarry Development being made available through Hong Kong’s 2022-23 land sale programme, with the government aiming to provide about 12 hectares of land in the former rock quarry for construction of 9,400 new homes.
Kwun Tong Makeover
Lot 1078, located about a 10 minutes’ drive from the Kwun Tong MTR station, may attract up to 5 bids, and given the site’s smaller scale of 63,291 square feet may not attract big developers, according to Hannah Jeong, head of valuation and advisory services at Colliers Hong Kong.
The site is one of just four commercial plots being put up for tender across Hong Kong in the 2022-23 land sale programme, according to the Lands Department schedule.
Existing retail supply in the area is scarce, mainly comprising aging malls owned by Hong Kong’s Link REIT – such as the Sau Mau Ping shopping centre – or by the Housing Authority, while future supply is limited, according to Colliers in a tender forecast published earlier this month.
Upon its completion, the Anderson Road project will provide retail space to meet growing demand from residents of nearby public housing estates, which would be completed in phases from 2024, said Colliers’ Jeong. This includes residential projects by developers such as CK Asset Holdings, which acquired Lot No.1069, also in Survey District 3, at a consideration of HK$4.95 billion to build 1,700 private and subsidised homes.
In 2018, Chinachem Group acquired a residential site in the same district at a consideration of HK$3.1 billion, which is now completed as Mount Anderson. on 23 On Hei Street in Kwun Tong North. The project is scheduled for completion in 2023, and will offer 334 flats.
The winning developer of Lot 1078 would be braving Hong Kong’s retail market downturn, with transactions of existing retail assets in the city having slid by 79 percent year-on-year to total HK$2.3 billion in the second quarter of this year.
Despite that decline, Kwun Tong will be seeing new retail projects completed within the next six years, with the Urban Renewal Authority having submitted an application to the Town Planning Board to revise a development plan for a site in the area.
That revision would allow Development Areas 4 and 5 of the URA’s Kwun Tong Town Centre project to be used for commercial purposes, including retail, offices, and hotels, with the HK$46 billion mixed-use project is scheduled for completion in 2028.
Adjacent to Kwun Tong’s Lot 1078 is another commercial site, Lot 1077, which will be sold through a separate tender in the second half of this year’s land sale programme, ending in March 2023, according to the Lands Department.