The first seafront commercial plot of land on the runway of Hong Kong's former airport, Kai Tak, has sold for a record HK$11.1 billion (US$1.41 billion), the city's Lands Department said on Wednesday.
Hong Kong developer Goldin Financial Holdings shrugged off the turmoil of an escalating trade war to win the tender for Kai Tak 4C Site 4, the second commercial plot on the runway to be offered for sale. At HK$12,888 per square foot, the sale was broadly in line with a forecast of HK$13,000 per square foot by market observers.
Goldin Financial, which has bought a residential site on the runway next to the plot it won on Wednesday, said it will build a high-end hotel and offices, and that its total investment could amount to HK$18 billion.
"They were quite aware of the negative news as they submitted their bid, after the escalation of the trade war. The high price shows their confidence," said Vincent Cheung, managing director of property consultancy Vincorn Consulting and Appraisal.
The last commercial plot successfully sold at Kai Tak " the second at the site " went for HK$12,863 per square foot through tender in May 2017.
A tender for the first commercial plot on the runway was scrapped after the nine bids received failed to meet the government's minimum price in January, during a correction in the city's property market.
Goldin Financial beat major Hong Kong developers, including CK Asset Holdings, Sun Hung Kai Properties, Wheelock Properties, Great Eagle Holdings and Sino Land to the seafront plot.
The company, chaired by Pan Sutong, won the tender for phase one of the Ho Man Tin station project in Kowloon in 2016.
"[Goldin Financial] is playing for keeps. It is clearly betting on the development of the Kowloon East area," said Thomas Lam, executive director of consultancy Knight Frank.
Forbes estimates that Pan, who owns China's biggest polo club in Tianjin, has a net worth of US$4.7 billion. He is also building China's tallest building, Goldin Finance 117, the centrepiece of his multibillion-dollar Goldin Metropolitan development in Tianjin.
The site, located near Hong Kong's cruise terminal, offers full views of Victoria Harbour and can yield 863,000 sq ft of gross floor area.
A total of five commercial sites are scheduled for tender at the site, three of them located on the runway that juts into Victoria Harbour.
The trade war has failed to dent a strong recovery in Hong Kong's property market, which went through a correction between August and December last year.
Sentiment around the city's residential property market has been upbeat, with Swiss bank UBS forecasting a bull run that could last another 10 years. Moody's Investors Service too revised its 2019 forecast for Hong Kong home prices, which are now expected to increase by between 8 per cent and 10 per cent. In a forecast in November last year, the rating agency said prices would drop by 15 per cent over the next 12 to 18 months.
Kai Tak, left vacant after the city's airport shifted to Chek Lap Kok in 1998, will be redeveloped into Hong Kong's second main business district.
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