Wheelock Closes in on $2.5B Residential Project in Kowloon Bay

Wheelock Properties is taking final steps toward building a HK$20 billion ($2.5 billion) residential project in Hong Kong’s Kowloon Bay, having reportedly submitted an application to redevelop an industrial property in the area into 1,782 new homes.

The developer controlled by tycoon Peter Woo is on its way to building a 822,578 square foot (76,420 square metre) project incorporating seven residential towers facing Victoria Harbour along a waterfront promenade, along with 6,458 square feet of retail space, according to planning documents submitted by Wheelock earlier this year.

Its application for converting the industrial site along Kai Hing Road for residential use will require payment of a land premium estimated at around HK$4 billion, according to Alex Leung, senior director of CHFT Advisory and Appraisal. Once that payment is complete, the developer would be eligible to begin redeveloping the site overlooking Kowloon’s former Kai Tak runway.

Its proposed residential project could be worth between HK$20 billion and HK$23 billion when completed, said Cyrus Fong, senior director of valuation and advisory at Knight Frank. “We expect the developer to build units (averaging 400 to 500 square feet) based on saleable area,” said Fong, who added that each unit should fetch between HK$11 million and HK$13 million on average.

Crazy for Kai Tak

Spanning 165,807 square feet along Kai Hing Road, Wheelock’s site is located just over one kilometre (0.6 miles) from the Ngau Tau Kok MTR station in Kowloon East, an area which local officials are promoting as a second CBD for Hong Kong. The project is just steps away from the Octa Tower office block.

The redevelopment application followed Wheelock’s recent internal transfer of the remaining pair of plots at 1-5 Kai Hing Road, known as Lot No. 5805 and Lot 5982, to a company subsidiary for a combined HK$1.7 billion, local media reported. That shift came five years after the company had transferred an initial parcel to the same entity in 2017 for HK$950 million.

Each tower is set to reach 28 storeys upon completion in a neighbourhood where current prices for private homes range from HK$22,000 to HK$30,000 per square foot of floor area, according to Knight Frank’s Fong. CHFT’s Leung estimates that the project’s value could reach nearly HK$24 billion.

Wheelock’s existing residential projects near its Kai Hing Road site include Oasis Kai Tak on 10 Muk Ning Street – about a 3.5-kilometre (2.1-mile) drive from the property –  where asking prices for new homes are at least HK$23,561 per square foot, according to data from Midland Realty.

The developer also invested in four sites on the former Kai Tak air strip through joint ventures with other developers during 2018 and 2019, and in those same two years spent HK$13.25 billion acquiring a pair of additional sites on the former runway from HNA Group when the mainland investor was struggling to avoid bankruptcy.

Buying the Dip

Despite full year residential transactions predicted to fall by 20 to 25 percent year-on-year, Wheelock has been actively replenishing its housing pipeline, including a recent acquisition of a site at 47-57 Staunton Street in Hong Kong island’s Soho area at a valuation of HK$529 million. That purchase via Hong Kong’s compulsory sale law in May, paved the way for a residential project worth more than HK$1 billion.

Two months before that deal, the developer acquired Ventris Court, a residential tower in Hong Kong Island’s Happy Valley valued at HK$1.73 billion through another compulsory sale, with analysts expecting Wheelock to redevelop the property into a HK$3.5 billion luxury project.

On the commercial side, the developer in May submitted a compulsory sale application for the remaining space in an industrial building in Wong Chuk Hang, which analysts predicted would make way for the development of a HK$2 billion commercial project.