Coronavirus fails to stop Hong Kong developers as new site in Lohas Park draws nine bids

By Martin Choi martin.choi@scmp.com / https://www.scmp.com/business/article/3048943/coronavirus-fails-stop-hong-kong-developers-new-site-lohas-park-draws-nine?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp | February 11, 2020 6:16 PM SGT
Not even the coronavirus outbreak is stopping Hong Kong's biggest developers from bidding for the biggest plot of land within the Lohas Park development in New Territories in five years. The land tender also came with a sweetener in lower land premium.
There were nine bids for the 961,100 sq ft (89,290 sq m) lot of land in southeastern New Territories at the 2pm local time deadline on Tuesday, according to MTR Corporation. The plot can accommodate up to 2,000 homes, making it the largest among the phases in Lohas Park in the past five years.
The bidders included CK Asset Holdings, Henderson Land Development, Sun Hung Kai Properties, Wheelock, China Overseas Land & Investment, Chinachem Group and Sino Land. New World Development and Empire Group submitted a joint bid. The ninth bidder was not revealed.
ADVERTISEMENT
"It has been difficult to buy land in recent years, and developers still need to increase their land banks," said Thomas Lam, executive director at Knight Frank. "The supply of large residential sites near MTR stations is limited, so the development already has considerable advantages."
The new site is situated on top of a proposed shopping centre, south of the Lohas Park MTR station. The Lohas Park development will be home to about 58,000 residents in 21,500 flats when fully completed in 2025, making it Hong Kong's single largest residential community.
MTR, the city's subway operator, is the main project developer.
ADVERTISEMENT
The number of bidders was in line with expectations, and despite the recent outbreak of the coronavirus in the city, the development was still attractive to property developers, said Knight Frank's Lam.
Besides, the cost of the land appears to be cheaper, possibly reflecting the impact of social unrest last year. This is based on the lower land premium of HK$2.725 billion, or HK$2,835 per sq ft as disclosed in the tender document published in December, about 10 per cent below the premium on the previous lot sold in April.
The number of homes to be built is about one fifth of the 8,800 private flats expected to be built on the 15 private residential sites to be sold by the government in the quarter to March 31.
ADVERTISEMENT
While the site is attractive with developed infrastructures, developers would be more cautious with the selling price, Lam said. This is due to worries that the coronavirus outbreak could further weaken the economy.
He estimated the total investment for the new phase would be HK$5.3 billion to HK$6.2 billion, or about HK$5,500 to HK$6,500 per sq ft. The price of residential units in the development could reach above HK$16,000 per sq ft, based on market indicators.
A three-bedroom unit measuring 680 sq ft in the first phase of Lohas Park was recently sold for HK$8.17 million or HK$12,012 per sq ft, after the owner cut the price by around 8 per cent after news of the viral outbreak in Hong Kong, according to Sam Chu, a branch manager at Centaline Property's Tseung Kwan O Metro Town branch.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.