Kai Tak runway parcel tender receives muted response even after valuation is cut by 15 per cent

By Lam Ka-sing kasing.lam@scmp.com / https://www.scmp.com/property/hong-kong-china/article/3036906/kai-tak-runway-parcel-tender-receives-muted-response-even?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp | November 26, 2019 11:57 AM SGT
The tender for a sea-facing plot of land on the runway of Hong Kong's former airport received only four bids even after its valuation was cut by 15 per cent to reflect the worsening state of the city's economy following five months of social unrest, the US-China trade war and a looming vacancy tax. The four bids are on par with a record for the lowest number of bids, set by Area 4A Site 1, another plot, in July.
Sun Hung Kai Properties, CK Asset Holdings, a consortium of Sino Land Company, Great Eagle Holdings and Chinese Estates Holdings as well as a consortium of China Overseas Land & Investment, Henderson Land Development, The Wharf (Holdings) and K Wah International put in bids for the residential parcel, Area 4A Site 2, in Kai Tak. The plot can yield a gross floor area of 1.2 million sq ft, or 18.66 soccer fields.
"It is at the bottom end of our expectations ... as the environment is not very good. Before, there would be six or seven bids," said Alex Leung, senior director at CHFT Advisory And Appraisal, who was expecting four to six bids.
He added that since the plot area was large only bigger developers could participate. It is the biggest and most valuable plot on the runway.
An aerial view of the runway at the old Kai Tak airport. Photo: Martin Chan alt=An aerial view of the runway at the old Kai Tak airport. Photo: Martin Chan
James Cheung, executive director at Centaline Surveyors, also noted the number of bids was "lower than expected".
Thomas Lam, executive director at Knight Frank, cut his valuation for the plot by 15 per cent to up to HK$19.8 billion (US$2.53 billion), or HK$15,500 to 16,500 per square foot.
Lam said flats, most likely to range from 450 sq ft to 750 sq ft, could sell for more than HK$30,000 per square foot, with the total development cost estimated at between HK$23 billion...