Hong Kong developer Wharf Holdings Ltd on Wednesday announced its acquisition of the city’s priciest piece of residential land ever as it won a government auction of a site on Victoria Peak.
The blue-chip builder agreed to pay HK$12 billion ($1.6 billion) to purchase the site at 2, 4, 6 and 8 Mansfield Road, shouldering aside six other bids from its largest local competitors, including Sun Hung Kai Properties, Henderson Land Development and CK Asset, according to an announcement by Hong Kong’s Lands Department.
“The group is one of the largest private property owners on The Peak and has many years of experience meeting the ultra high expectations of buyers and residents for these super luxury properties,” said Stephen Ng, chairman and managing director of Wharf. “The successful acquisition of the Mansfield Road site will double the group’s Peak land bank to over 500,000 square feet.”
Wharf is well familiar with the neighbourhood around Mansfield Road, having notched some of Hong Kong’s biggest-ticket home sales in recent years at its nearby Mount Nicholson project.
Paying Above Expectations
The parcel in Hong Kong’s poshest neighbourhood has a site area of 135,000 square feet (12,542 square meters), yielding 259,000 square feet of gross floor area.
The price paid by Wharf implies an accommodation value of HK$46,300 per square foot, making it the most expensive housing site ever sold by the government on a price per unit area basis. Wharf’s purchase exceeded the market expectations for the property, which had ranged from HK$7.78 billion to HK$11.15 billion in advance of the sale.
Thomas Lam, executive director and head of valuation and advisory at Knight Frank Greater China, said the bid reflected the developer’s strong confidence in the market outlook for super luxury housing.
“This transaction will have a positive effect on land and home prices on The Peak,” Lam told Mingtiandi. “The higher-than-expected sale could also contribute to scarcity in further land supply on The Peak.”
The parcel sold this week is a considerable slice of a 189,445 square foot site that failed to sell at a previous auction in October 2018. In late September of this year, the government relaunched the site tender at the pared-down size, a strategy that appears to have paid off.
Lam urged the government to speed up plans to sell the remaining plot, the value of which he reckoned could reach HK$45,000-HK$47,000 per square foot.
With the exception of locally managed mainland developer CC Land, which partnered with Thomas Lau’s Lifestyle International for a bid on the Mansfield Road parcel, the remaining bidders were all locally based, despite mainland firms having dominated Hong Kong’s land auctions this year.
KB Wong, executive director and head of valuation and advisory services for Hong Kong at Cushman & Wakefield, suggested that developers based in the city were in a stronger competitive position.
“Local developers experienced in luxurious residential development have advantages in both understanding of the market taste for this niche market, as well as controlling the development cost,” Wong said.
Wharf in particular has extensive experience in luxurious residential development and has built up goodwill in the market, giving it a competitive edge over competitors, he said.
Wharf has not released detailed plans for the Mansfield Road site, which was formerly occupied by state-owned housing for civil servants. The company said only that the project would be managed, developed and marketed by its Wheelock Properties affiliate
Knight Frank’s Lam said development on the site would likely consist of super luxury houses, possibly mixed with apartment-type dwellings. Total development cost is expected to range from HK$15 billion to HK$16 billion, fetching about HK$90,000 per square foot upon completion, he said.