Hong Kong News

Nonpartisan, Noncommercial, unconstrained.
Friday, Feb 03, 2023

Li Ka-shing’s property unit gets bargain on Kai Tak land at US$1.12 billion

Li Ka-shing’s property unit gets bargain on Kai Tak land at US$1.12 billion

CK Asset will pay 2014 prices for a parcel above the Sung Wong Toi MTR station that is expected to accommodate about 1,750 homes.

Tycoon Li Ka-shing’s flagship property developer has picked up land in Kai Tak at 2014 prices, winning the biggest government land sale this quarter at a price almost 25 per cent below market expectations.

CK Asset will pay HK$8.7 billion (US$1.12 billion) for a plot on top of Sung Wong Toi MTR station, according to a statement from the Lands Department on Wednesday. The price translates to HK$6,138 per square foot – the lowest for a residential parcel in the area in eight years – amid slumping home sales and mounting supply of new homes.

The plot, officially designated Kai Tak Area 2A Site 4, Site 5(B) and Site 10, has a gross floor area of 1.42 million sq ft, and is expected to accommodate about 1,750 homes. CK Asset beat Nan Fung Development, Henderson Land Development, Wheelock Properties, Early Light Land (Holdings) and a consortium of K. Wah International, Sino Land and Great Eagle Holdings.

CK Asset is “very happy to win a large-scale parcel in the Kai Tak New Area at a reasonable price this time,” Executive Director Grace Woo Chia Ching said in a statement. “The small and medium-sized residential units are expected to be very popular upon completion and can hopefully bring very desirable returns,” Woo said.

The land sold on Wednesday is numbered 28 on this map of the parcels in the Kai Tak area, former site of Hong Kong’s airport.

The location is superior because of the MTR station, Woo said, adding that a planned underground shopping street will connect to Kowloon City and Kai Tak MTR Station.

Valuations ranged from HK$11.34 billion to HK$14.89 billion, which translates to HK$8,000 to HK$10,500 per square foot.

“We valued it at HK$8,000 per square foot,” Vincent Cheung, managing director of Vincorn Consulting and Appraisal, told the Post. “It was already very low – the lowest in Hong Kong. But now it turned out to be even lower.”

The price is less than half of the HK$15,861 per square foot that CK Asset paid in February 2021 for another parcel with sea views on the former airport’s runway.

Wheelock Properties paid HK$6,101 per sq ft for what is now Oasis Kai Tak, near the Kai Tak MTR station, in May 2014.

The land sold on Wednesday was originally zoned for commercial use. The tender was withdrawn in 2020, and the land was finally re-zoned by the government for residential use.

There are some restrictions on development, which will increase construction costs, according to Midland Surveyors, which said the total investment will exceed HK$15 billion.

Cheung said developers offered lower bids to balance risks given that the Centa-City Leading (CCL) Index, a gauge of lived-in home prices compiled by Centaline Property Agency, has declined 17.1 per cent since its peak of 191.34 in early August 2021.

“Developers these two years bought a lot of residential and commercial parcels,” Cheung said. They are now facing high inventory amid sluggish sales, as buyers hold off due to economic conditions and high interest rates, he said.

Supply “suddenly surged” in recent years, with land sold in West Kowloon, Kwun Tong’s Anderson Road, Causeway Bay’s Caroline Hill Road and Site 3 of New Central Harbourfront.

Developers have turned cautious about tenders, a fact that became more obvious in the fourth quarter as government sites sold at or below the lower end of market expectations.

“Developers will continue to be conservative in land bidding and land prices will continue to fall in 2023,” said Alkan Au, senior director of valuation advisory at JLL. “The decline in land prices will be more than housing prices. The construction costs are still on an upwards trajectory and will be fuelled by the looming inflation. The interest rate hikes have significantly increased financial costs.”

This is the fourth winning bid for CK Asset this year amid the depressed prices. It forked out HK$20.46 billion in total for two redevelopment projects and two government parcels. And Wednesday’s win came less than a week after CK Asset picked up an Urban Renewal Authority redevelopment project in Sai Ying Pun for HK$1.16 billion, or just HK$9,554 per square foot – 27 per cent below the price paid for a nearby project in August.

The government has generated HK$21.8 billion from land sales and lease modifications or land exchanges as of December 13, reaching about one-fifth of the land income target for the current financial year.

JLL estimated the government could generate an extra of HK$35.5 billion from the tender of government sites, URA and MTR projects by the end of the current financial year in March.

Including the previous land income, the government may not be able to achieve its land income target of HK$120 billion for the financial year, JLL added.


Related Articles

Hong Kong News
WARNING GRAPHIC CONTENT - US Memphis Police murdering innocent Tyre Nichols
Almost 30% of professionals say they've tried ChatGPT at work
Interpol seeks woman who ran elaborate exam cheating scam in Singapore
Chinese search giant Baidu to launch ChatGPT like AI chatbot.
What is ChatGPT?
Bill Gates is ‘very optimistic’ about the future: ‘Better to be born 20 years from now...than any time in the past’
China is opening up for foreign investors.
Tesla reported record profits and record revenues for 2022
Prince Andrew and Virginia Giuffre Photo Is Fake: Ghislaine Maxwell
Moonwalker Buzz Aldrin Gets Married On His 93rd Birthday
Federal Reserve Probes Goldman’s Consumer Business
China's first population drop in six decades
Microsoft is finalising plans to become the latest technology giant to reduce its workforce during a global economic slowdown
China's foreign ministry branch in Hong Kong urges British gov't to stop the biased and double standards Hong Kong report
China relaxes 'red lines' on property sector borrowing in policy pivot
Tesla slashes prices globally by as much as 20 percent
Japan prosecutors indict man for ex-PM Shinzo Abe murder
Vietnam removes two deputy PMs amid anti-corruption campaign
1.4 Million Copies Of Prince Harry's Memoir 'Spare' Sold On 1st Day In UK
After Failing To Pay Office Rent, Twitter May Sell User Names
FIFA president questioned by prosecutors
Britain's Sunak breaks silence and admits using private healthcare
Hype and backlash as Harry's memoir goes on sale. Unnamed royal source says prince 'kidnapped by cult of psychotherapy and Meghan'
China’s recovery could add 1% to Australia’s GDP: JPMorgan 
Saudi Arabia set to overtake India as fastest-growing major economy this year 
China vows to strengthen financial support for enterprises: official
International medical experts speak out against COVID-19 restrictions on China
2 Billion People To Travel In China's "Great Migration" Over Next 40 Days
Google and Facebook’s dominance in digital ads challenged by rapid ascent of Amazon and TikTok
Flight constraints expected to weigh on China travel rebound
Billionaire Jack Ma relinquishes control of Ant Group
FTX fraud investigators are digging deeper into Sam Bankman-Fried's inner circle – and reportedly have ex-engineer Nishad Singh in their sights
Teslas now over 40% cheaper in China than US
TikTok CEO Plans to Meet European Union Regulators
UK chaos: Hong Kong emigrants duped by false prospectus
China seeks course correction in US ties but will fight ‘all forms of hegemony’, top diplomat Wang Yi says
China will boost spending in 2023
African traders welcome end of China’s Covid travel curbs
France has banned the online sale of paracetamol until February, citing ongoing supply issues
Japan reportedly to give families 1 million yen per child to move out of Tokyo
Will Canada ever become a real democracy?
Hong Kong property brokerages slash payrolls in choppy market
U.S. Moves to Seize Robinhood Shares, Silvergate Accounts Tied to FTX
Effect of EU sanctions on Moscow is ‘less than zero’ – Belgian MEP
Coinbase to Pay $100 Million in Settlement With New York Regulator
Preparations begin for Spring Festival travel rush
Domestic COVID-19 drug effective in trial
HK to see a full recovery, John Lee says in New Year message
Bargain hunters flock to last day of Hong Kong brands and products expo
Hong Kong aims for January 8 reopening of border with mainland China