K Wah International Holdings is adding an eighth residential project to its Hong Kong pipeline after the HKEX-listed developer’s HK$551 million ($70.1 million) bid led a government tender for a land in Mid-Levels West, according to an announcement Tuesday evening..
Despite ten competing bids, the winning bid from the developer controlled by casino magnate Lui Che-woo was well below market expectations of HK$580 million to HK$950 million for what was one of two only residential sites on Hong Kong Island to be made available in the government’s land sale program for the first half of the year.
The discount sale was likely due to rising interest rates and restrictive bidding conditions, including limited parking spaces, said Vincent Cheung, managing director of Vincorn Consulting and Appraisal.
While Swire Properties last month bought Hong Kong Island’s only other residential site donated by the government in the first half of the year for HK$1.96 billion, it has exceeded expectations, with Market data released since then shows Hong Kong home sales fell to a near two-year low in June as Hong Kong home buyers face the prospect of more expensive mortgages due to price hikes. interest rates in the United States.
K Wah Win
Having beaten bids from top local developers including Wheelock Properties and CK Asset, K Wah is set to build up to 42,978 square feet (3,992.8 square meters) of gross floor area on the Hospital Road plot. At the bid price, the developer pays the equivalent of HK$12,821 per square foot of GFA.
Upon completion of the housing project, K Wah is expected to develop the 5,372 square foot site into approximately 100 residential units, worth up to HK$1.1 billion, said Alex Leung, senior director of CHFT Advisory and Appraisal.
The project is limited to residential use, with the developer required to build apartments of at least 280 square feet (26 square meters) of salable area each, according to Land Department tender documents.
While the Hospital Road site attracted 11 bids in total, Swire had to respond to 20 competing tenders, including bids from Sun Hung Kai Properties and Henderson Land, to win its project on Queen’s Road East in Wan Chai last month.
Analysts pointed to location and site characteristics to explain the more moderate bids for this latter parcel.
“Although the distance to Sai Ying Pun MTR station may seem close, the site is accessible by a continuous uphill hike along Hospital Road,” said Hannah Jeong, Head of Assessment and Advisory Services. at Colliers, who noted that the site’s quality may have dampened developer enthusiasm.
Other challenges for the successful bidder include preservation requirements for a stone retaining wall facing Hospital Road as well as trees that have grown atop the aging structure, according to the tender documents.
Although analysts have pointed out that there are no new developments in the immediate vicinity of the site, CHFT’s Leung noted that Hong Kong’s Sai Ying Pun district – to which Hospital Road is directly connected – will see 1,500 new houses completed in 2022.
Jeong also pointed out that with the gaming and hospitality industries around Hong Kong still bearing the brunt of the region’s COVID Zero policy, buyers like K Wah may have had additional incentive to enter the market. residential.
With companies like Paliburg Holdings Limited and Regal Hotels International Holdings also bidding for the site, Jeong said “some (bidders) are not traditional residential developers,” while noting that this may indicate that “the residential market is a better bet than other sectors for investors.
For K Wah, the Hospital Road project is located near 30 Po Shan Road, a mid-level site where it is developing a 39,826 square foot residential complex in a 50/50 joint venture with Chuang’s Consortium International Limited. This project should be completed, at the earliest, in 2024.
Beyond Hong Kong Island, K Wah is working with Sino Land and China Overseas Land and Investment (COLI) to develop the Grand Mayfair II condo project in the New Territories, with the joint venture partners having sold 249 of the 288 apartments made available during their second round of sales in May.
K Wah also holds a 40% stake in a joint venture with Wheelock Properties and COLI which is developing the largest residential project on the former Kai Tak airstrip. The joint venture partners purchased this site for HK$12.74 billion in 2019, with the project expected to be completed within the next two years.