State-backed conglomerate Citic Pacific wins bid for Tai Hang luxury residential site for HK$3.2 billion

By Lam Ka-sing and Sandy Li / | December 26, 2019 10:53 AM SGT
Hong Kong-listed and Chinese state-backed conglomerate Citic Pacific has won a luxury residential plot in Tai Hang, southeast of Causeway Bay, for HK$3.2 billion (US$410.8 million), the city's Lands Department said on Wednesday.
The company beat 24 other bidders for the plot, which was initially expected to go for a bid between HK$1.7 billion and HK$5.41 billion (US$218 million and US$694 million), according to market observers.
The winning bid is being viewed as indicative of the cautious outlook prevailing in Hong Kong's property market following seven months of anti-government protests as well as the more than a year old US-China trade war.
"The conservative pricing has definitely been affected by the current market conditions, as well as the impending vacancy tax," said Thomas Lam, executive director at property consultancy Knight Frank.
The Tai Hang plot " won by Bright Vision International, a company Citic Pacific owns " is the first Citic Pacific has won since securing a residential site in Ma On Shan for HK$1.47 billion four years ago. The company said it plans to invest HK$5.5 billion, including the land cost, in the development.
Other bidders for the plot included major Hong Kong developers CK Asset Holdings, Sun Hung Kai Properties and Henderson Land Development, as well as mainland Chinese developers such as KWG Group, Kaisa Group Holdings and Logan Property Holdings.
At HK$3.2 billion, Citic Pacific's bid translates into HK$24,836 (US$3,188) per square foot. The plot has been used as housing for civil servants, and a 2,132 sq ft flat would have been leased by the Government Property Agency for HK$58,600 (US$7,522) a month, or HK$27 (US$3.47) per square foot.
The plot can yield about 130 flats. Cindy Kwan Kit-ying, director of subsidiary Citic Pacific Property Agents, said the mid-sized flats could be worth more than HK$50,000 per square foot. Currently, units in Tai Hang are going for HK$21,000 to HK$43,000 per square foot.
Some properties in the vicinity of the plot have been sold for a loss this year. A 383 sq ft flat at The Warren, a luxury housing estate in Tai Hang, was sold for HK$9.3 million, a loss of HK$580,000, in early July after being held for eight years, according to agent Century 21.
A similar flat sold for HK$8 million, a loss of HK$1.45 million, in January after being held for seven years.
The asking price at the nearby Cavendish Heights, a 33-year-old luxury housing estate, stood at HK$36,664 per square foot, according to Centaline Property Agency. At Jardine's Terrace, a similar development, the asking price was HK$43,946 per square foot, according to Midland Realty.
Citic Pacific's winning bid also comes after consultants JLL, Knight Frank and Cushman & Wakefield said they expected Hong Kong home prices to fall by up to 20 per cent in the coming year, as the city suffers from its worst recession in a decade.
The sales of luxury homes costing HK$20 million and above plunged to a three-year low in the first 11 months, Centaline said this week.
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 © 2019 South China Morning Post Publishers Ltd. All rights reserved.
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