Hong Kong property: sole bidder Sino Land secures site on Lantau Island for US$26 million, nearly 20% below expectations as market languishes

The developer won the 1.9-hectare parcel in Cheung Sha for HK$203.9 million (US$26.1 million), according to the Lands Department
The plot will accommodate low-rise town houses that are expected to be sold for between HK$13,000 and HK$14,000 per sq ft

Hong Kong property

Daniel Renin ShanghaiandSalina Liin Hong Kong

Published: 10:11pm, 20 Dec 2023

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Sino Land, the only bidder in the tender for a plot of land on Lantau Island, has paid a price nearly 20 per cent lower than market expectations as Hong Kong’s housing market continues to languish in the doldrums.

The developer won the 1.9-hectare (4.7-acre) parcel in Cheung Sha for HK$203.9 million (US$26.1 million), bidding for which ended on December 15, according to the Lands Department. The site is expected to yield 110 housing units.

It had been valued at about HK$245 million based on a gross floor area of 81,666 square feet, which translates to HK$3,000 per sq ft, Midland Surveyors estimated.

It is the only residential plot of land available in Hong Kong in the current quarter.

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“The bid was submitted in a conservative manner and the transaction also reflected the government’s flexibility in selling the parcel in line with the current market conditions,” Midland said in a research note after the land sale on Wednesday.

“With only one bidder registered, a successful sale at a low price shows that the authorities do not want to withdraw the site.”

The land parcel will accommodate low-rise and low-density town houses that are expected to be sold for between HK$13,000 and HK$14,000 per sq ft, which is close to the price level of neighbouring developments built in 2015, said Alex Leung, senior director at CHFT Advisory and Appraisal.

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The final price for the site is 87 per cent lower than the record set in the area by Guangzhou-based Agile Property Holdings which bought a parcel of land in 2017 for HK$19,667 per sq ft, according to Leung.

Sino Land has been keen to secure land in this location, having won a small plot close to the waterfront in 2018.

Last Thursday, a consortium led by Sino Land won the right to develop a plot in Ma Tau Wai from the Urban Renewal Authority (URA).

The bid displayed the group’s confidence in a location that is highly sought after by other developers, according to Sino Land’s deputy chairman, Daryl Ng.

A general view of Cheung Sha Beach in Lantau. Photo: Lam Ka-sing

The company, along with China Merchants Land and Great Eagle Holdings, beat five other developers with a winning bid of HK$1.93 billion for the site on Shing Tak Street, which will yield 414,900 sq ft of space, including 345,500 sq ft of residential floor area, according to announcements by Sino Land and the URA.

Ng said in a statement at the time that the prime site was an excellent addition to the company’s land bank, and that Sino Land was committed to Hong Kong and China, and full of confidence in both economies.

Hong Kong saw a record six failed land tenders this year as high interest rates, a sluggish economy, and complex development requirements diminished developers’ appetite for new plots, according to Colliers.

A total of 10 projects were launched by the government, the MTR Corporation, and the Urban Renewal Authority (URA) between January and November this year.

Only four of them – three residential sites and a commercial parcel – drew enough bids for the tender process to continue.

Lived-in home prices in Hong Kong recorded a 19 per cent fall in October compared to their peak in September 2021, according to the latest data released by the Rating and Valuation Department.

That month saw the lowest sales volume of the year for homes in the secondary market, at 1,917.