(Source: South China Morning Post)
Henderson Land Development, the property company owned by one of Hong Kong’s wealthiest families, has bought the world’s most expensive commercial land plot in downtown Hong Kong Central, beating out mainland Chinese developers who had been dominating the city’s real estate purchases in the past year.
Henderson Land will pay a record HK$23.28 billion (RM12.91bil ) for the government’s Murray Road commercial plot in Central, beating out eight rival bids, according to the Lands Department’s data. It is the first Grade-A site in Hong Kong’s Central area to go on sale in 20 years, and is one of two commercial sites put out to tender on March 31, 2017.
The plot, which can be developed into a commercial building with 465,005 sq ft of total gross floor area, translates to HK$50,064 (RM27,776) per square foot, way above market expectations and professional valuations of between HK$15.7 billion (RM8.71bil) and HK$22 billion (RM12.21bil). The plot’s record price came even after the Hong Kong Monetary Authority on May 12 ordered banks to cut their loans to developers to 40% of a site’s value, from the previous 50%.
“Today’s tender result sets a new benchmark for the local property market,” said Denis Ma, head of research at JLL. “It will be interesting to see how this affects pricing in the property and stock markets.”
The successful bid was Henderson’s first in almost two years, as it and other Hong Kong developers had been priced out by aggressive mainland Chinese companies like HNA, which spent HK$27.2 billion (RM15bil) over four months to snatch four parcels of land at the former Kai Tak airport.
For the Murray Road property, mainland Chinese bidders were mostly absent, due to tightened policies by the Chinese government to stem capital flight.
Henderson plans to develop the site, currently occupied by a five-storey public car park, into “a landmark building” scheduled for completion in 2022, according to a statement by the developer’s vice-chairman Martin Lee Ka-shing, the youngest son of Hong Kong’s second-wealthiest man Lee Shau-kee. The total investment cost of the project may exceed HK$26 billion (RM14.4bil) inclusive of the land cost.
Expectations over the Murray Road plot had already spilled over to surrounding commercial properties, boosting capital values by as much as 11% ever since the government put the site up for tender. A Grade-A office unit at 9 Queen’s Road in Central sold in April for HK$145.82 million (RM80.8mil) in transacted office price.