Developers are lukewarm on Kai Tak's commercial plot as trade war impasse creates an anticlimax to a week of record home sales

By Pearl Liu pearl.liu@scmp.com / https://www.scmp.com/business/article/3009770/developers-are-lukewarm-kai-taks-commercial-plot-trade-war-impasse-creates?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp | May 14, 2019 10:48 AM SGT
The second commercial property plot on the runway of Hong Kong's former airport received fewer bidders when a government tender closed on Friday, as the absence of a resolution in the US-China trade war provided an anticlimax to a week of record-breaking sales in the city's home market.
Area 4C Site 4 on the Kai Tak runway, valued at HK$11.2 billion (US$1.4 billion), or HK$13,000 per square foot for the 863,000 square feet (80,175 square metres) of gross floor area, received six bids, according to the Lands Department. A January tender for the first commercial plot was scrapped after the nine bids received failed to meet the government's minimum price.
Four days earlier, a plot of residential land on the runway sold for HK$12.6 billion, a record cost that translates into HK$30,000 per square foot in sales price when homes are built on the site, which means HK$30 million for a 1,000 sq ft apartment.
"Developers are choosing to be cautious, and adopt a wait-and-see approach, after the escalation of the trade war," said Vincent Cheung, managing director of Vincorn Consulting and Appraisal, who expected at least seven to eight bids for the oceanfront plot. "The issues between the US and China will continue much longer than expected."
The oceanfront plot, located near the city's cruise terminal, offers full view of Victoria Harbour, which separates Hong Kong Island from the Kowloon peninsula and will host a hotel up to 800 rooms, and some office blocks.
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US-China negotiations to avert the year-long trade war between the world's two largest economies ended at noon when the tender closed, with 25 per cent of US tariffs on US$200 billion of Chinese imports going into effect. Hong Kong's benchmark Hang Seng Index fell 5 per cent this week.
Developers who did...