A tender for a residential project in Hong Kong Island’s Western district closed on Monday having drawn nine bids for the opportunity to build housing worth HK$2.4 billion ($305.7 million) in Sai Ying Pun, according to an announcement from the city’s Urban Renewal Authority.
The site, which spans three addresses along Sung Hing Lane, Kwai Heung Street and Des Voeux Road West, is expected to have attracted bids in the HK$1.38 billion to HK$1.45 billion range, said Alex Leung, senior director at CHFT Advisory and Appraisal.
The winning bidder will walk away with the right to develop about 94,766 square feet (8,804 square metres) of gross floor area, of which about 4,305 square feet would be designated for retail use, according to the URA. Should the project sell at the low end of expectations, the developer would be paying approximately HK$14,562 per square foot of floor area to acquire the Sai Ying Pun project, according to Leung’s estimate.
With the development expected to yield as many as 165 new homes, units averaging around 420 square feet each could sell for about HK$13.4 million per flat, he estimated.
Sai Ying Pun Supply
The target site, includes 1 to 7 Sung Hing Lane, 12 to 16 Kwai Heung Street and 216 to 218 Des Voeux Road West, is located within a 3-minute walk of the Sai Ying Pun MTR station, which is just two stops west of the Central MTR station in the city’s primary business district.
The project is scheduled for completion between 2026 and 2027, according to the URA announcement, with each flat expected to sell for a unit price of about HK$31,904 per square foot.
“(New homes) in the area are mostly studio units and one-bedroom units,” Leung said, adding that current selling prices are in the region of HK$29,000 to HK$31,000 per square foot of saleable area.
Existing projects in the Sai Ying Pun area include Wang On Properties’ The Met Sublime – located just opposite the tendered site – at 1 Kwai Heung Street, where asking prices start at HK$23,780 per square foot, according to data from Midland Realty. Less than 300 metres away is Kerry Properties’ Island Crest, where asking prices for new homes are at least HK$25,401 per square foot, according to the property firm.
With its proximity to Central and to the University of Hong Kong, Sai Ying Pun has also been the site of some rental housing investments, with Warburg Pincus-backed Weave Living teaming up with global investor Angelo Gordon two months ago in a deal to buy a 214-unit hotel on Queen’s Road West for HK$900 million.
Bidding in a Slow Market
Although limited supply in the Sai Ying Pun area has helped to keep prices steady, the ongoing series of interest rate hikes could limit capital value appreciation in coming months, said CHFT’s Leung.
Capital values for mass market residential properties in Hong Kong fell by 0.7 percent in the second quarter, compared to the preceding three months, according to a report published by JLL this week. The property services firm expects that downward trend to continue with capital values in the sector sliding by a total of 3.9 percent this year from their 2021 level.
That slide in values comes despite a rebound in housing deals in May, when 1,492 new homes worth were purchased for HK$18.25 billion in May. Those figures were up 4.8 and 4 times respectively from April, when the city was facing restrictions on activity due to the fifth wave of the pandemic, according to a recent report from Centaline Property Agency