$2.7B Kai Tak Project Could Break Record for Hong Kong’s Priciest Housing Site

A development consortium including Wheelock, K Wah International and Sino Land shocked Hong Kong by paying a record HK$17.28 billion ($2.21 billion) for a waterfront residential site in Cheung Sha Wan late last year. Five months later, a residential lot at the city’s former airport site in Kai Tak is set to break the record for Hong Kong’s most expensive residential land. With a valuation of as much as HK$21 billion ($2.7 billion), the Kai Tak Area 1F Site 1 plot in Kowloon East opens to tender today.

The 178,000 square foot (16,537 square metre) residential plot is expected to fetch bids of anywhere from HK$19 billion ($2.4 billion) to HK$21 billion from the region’s land-hungry developers. Should the site sell for the expected price it would translate into a cost per square foot of site area of HK$13,500 ($1,720) to HK$15,000 ($1,911), according to Thomas Lam, Head of Valuation & Consultancy for Greater China at Knight Frank.

Prime Kai Tak Location Expected to Bring Record Bids

Situated at the northern tip of the Kai Tak development, Lam believes the location of the site will draw strong interest from developers. “As most of the residential sites on the north of Kai Tak are sold already, the area will be the first to have amenities completed for residents. The proximity to the future MTR station also makes the site appealing,” said Lam during a phone interview with Mingtiandi. Previous sales of residential projects in Kai Tak also went well, which can further drive the land price in Kai Tak, Lam added.

The site is expected to attract developers from in town, as well as from north of the border, with the land’s high value likely to drive consortium bids because of the scale of the capital commitment involved, according to Lam.

The site can provide up to 1.4 million square feet (131,457 square metres) of floor area which translates into 1,400 to 1,600 residential units. According to the tender requirements, the developer winning the plot needs to build two elderly day care centres of at least 3853 square feet (358 square metres) each, as well as a pair of residential elderly care homes each with a floor area of no less than 26,640 square feet (2,475 square metres). The elderly care properties are to return to the government upon completion.

The government will accept tender submissions starting from today to May 11, with the result of the tender to be announced a week afterwards.

At present, the throne to the city’s most expensive residential land belongs to 19,348 square metre (208,260 square foot) parcel New Kowloon Inland Lot No 6549 in Cheung Sha Wan, which was awarded to a consortium comprising Sino Land, Wheelock Properties, K Wah International and SEA Holdings for HK$17.28 billion last November.

Kai Tak Becomes HK’s New Development Hub

Kai Tak has become Hong Kong’s hottest development hub as large-scale plots become increasingly rare in Asia’s most underhoused city. The government has been investing in infrastructure in the 320-hectare former airport site in Kowloon East in the hope that Kai Tak will grow into the city’s second commercial hub after Central.

And developers are betting big on the up-and-coming area. Privately held Nan Fung Development paid a record-breaking HK$24.6 billion ($3.16 billion) for a commercial site in Kai Tak last June. The 19,044 square metre plot still holds the record for the city’s biggest land transaction.

Then in mid-February, Henderson Land paid HK$16 billion ($2 billion) to buy a pair of residential sites at the former airport site from HNA Group.The price paid by Lee Shau-kee’s company was 12.7 percent higher than HNA had paid for the land less than two years ago.

Henderson Land’s rival Wheelock and Company, which has an existing project in Kai Tak, ramped up its portfolio in the area by picking up a third site from HNA for HK$6.36 billion ($811 million) in mid-March.