Kai Tak's third-largest oceanfront plot sells for a record HK$12.6 billion as developers snap up land in Hong Kong's property bull run

By Pearl Liu peral.liu@scmp.com / https://www.scmp.com/property/hong-kong-china/article/3009237/kai-taks-third-largest-plot-residential-land-goes?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp | May 8, 2019 11:48 AM SGT
Six Hong Kong developers have agreed to pay HK$12.6 billion (US$1.6 billion) for the third-largest plot of residential land on the runway of the former Kai Tak airport, forking out a record price for the prime oceanfront real estate as a property bull market resumes in the world's costliest city.
The government tender for Kai Tak Area 4C Site 2 was won by the Marble Edge Investment consortium, comprising China Overseas Land & Investment, Chinachem Group, Empire Development, Henderson Land Development, New World Development and Wheelock Properties. An estimated HK$18 billion will be invested into the plot, with 641,168 square feet of gross floor area.
The price translates to a land cost of HK$19,636 per sq ft, which means an apartment complex built on the site will have to sell for at least HK$30,000 per sq ft, inclusive of a construction cost of between HK$5,000 and HK$7,000 per sq ft, with a 20 per cent profit margin for the developer. That would price a 1,000 sq ft (93 square metres) flat at HK$30 million.
The record-setting price shows that the short-lived price correction in Hong Kong's home market between August and December is well and truly in the rear-view mirror. Moody's Investors Service revised its 2019 forecast of Hong Kong's home prices to an increase of between 8 per cent and 10 per cent, reversing course from last November's prediction when the expectation was for prices to drop by 15 per cent over the subsequent 12 to 18 months.
SCMP Graphics
In land-scarce Hong Kong, land bids are often a weather vane for the property market's direction, where Kai Tak " offering full view of Victoria Harbour and earmarked to be the next central business district of the financial powerhouse " is the epicentre of the trend.
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