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Friday, Jun 09, 2023

Lone bidder SHKP wins West Kowloon plot as tough market deters rival bids

Lone bidder SHKP wins West Kowloon plot as tough market deters rival bids

The Artist Square Tower Project comprising three buildings with office, retail and entertainment features in the district billed as Hong Kong’s premier arts hub, was awarded to Winner Harvest Limited, a unit of SHKP.
The West Kowloon Cultural District Authority has awarded a 65,000 square metre (699,654 square foot) parcel of land to a unit of Sun Hung Kai Properties, one of Hong Kong’s largest developers.

SHKP was the lone bidder for the commercial plot, which was earlier forecast to fetch as much as HK$10.5 billion (US$1.3 billion).

The sale took place at a difficult time for Hong Kong’s property market, which is battling a triple whammy of rising interest rates, knock-on effects from the pandemic, and a slump in the city’s stock market.

This is likely to have deterred other developers from bidding, analysts said previously.

The Artist Square Tower Project, which comprises three buildings with office, retail, dining and entertainment features in the 40-hectare district billed as Hong Kong’s premier arts hub, was awarded to Winner Harvest Limited, a unit of SHKP, the authority said in a statement on Tuesday night.

“SHKP was awarded with the right to develop and operate the AST Project for a period of about 47 years under a Build-Operate-Transfer arrangement and will be responsible for the design, construction, financing, marketing, leasing, management, operation and maintenance of the AST Project,” the authority said.

“The authority considers the tender price offered by SHKP is commensurate with the market level and accepted the tender bid.”

The authority declined to divulge more information about the tender.

The project will be “another landmark area” in the district, according to Raymond Kwok, SHKP chairman and managing director.

“Upon completion of the Artist Square Towers Project, Hong Kong will be one of most vibrant arts and cultural hubs in the world,” he said.

“The Artist Square Towers Project is not purely a commercial development. It is an integral part of the West Kowloon Cultural District and will certainly help foster the development of Eastern and Western arts and cultural exchanges in Hong Kong.”

SHKP had been tipped by analysts as a potential bidder for the site given that it had previously won the commercial parcel above the West Kowloon terminus.

This was the second time the site had been put up for tender by the authority. It was originally put up for sale in February.

The latest tender included extending the BOT term to 47 years. While the terms of sale were enhanced, they still were not in line with the standard 50-year grant given to winning bidders in other land tenders in Hong Kong.

The property lies close to facilities including the M+ contemporary art museum, the recently opened Hong Kong Palace Museum, the Lyric Theatre Complex currently under construction and an 11-hectare Art Park fronting Victoria Harbour.

The site is also adjacent to the commercial and residential area above Kowloon Station, which is a stop for the Tung Chung and Airport Express lines, and close to Hong Kong West Kowloon Station, which is the terminus and only station on the Hong Kong section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link.

“SHKP is one of the major owners in West Kowloon as they own the ICC as well as the to-be-completed commercial complex on top of the high speed train terminus,” said Vincent Cheung, managing director of Vincorn Consulting and Appraisal.

“They are familiar with the leasing conditions and the potential renters. Their successful bidding for this asset can enhance their commercial synergy in terms of rental setting and adjustment and tenant mix in the district.”

Analysts believe SHKP may have been particularly attracted to the site because the lease term had been extended.

The “lengthened term in the contract” could have swayed SHKP to pursue the project, said Michael C.K. Lee, associate director of valuation and advisory at Prudential Surveyors.

“The bid price could be slightly higher than the previous tender earlier this year as the authority increased the lease term,” said Hannah Jeong, head of valuation and advisory services at Colliers in Hong Kong.
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