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‘Out of touch’ Hong Kong withdraws Kai Tak commercial plot from sale following tepid bids by developers amid economic contraction in city

  • Plot at former Kai Tak airport site withdrawn from sale after bids fail to meet government’s reserve price
  • Valuers had cut estimates for plot by as much as 20 per cent to between HK$6.38 billion and HK$10.44 billion

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Under construction residential buildings at the site of Hong Kong’s former airport at Kai Tak. Photo: Martin Chan
Sandy LiandLam Ka-sing
The Hong Kong government on Wednesday withdrew a commercial plot for sale at the site of the city’s former airport at Kai Tak following a tepid response from bidders, as the city’s worst economic contraction in decades amid the coronavirus pandemic deters developers from long-term investments.
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The plot, which can yield 1.16 million square feet (107,767 square metres) in gross floor area, failed to sell because property developers’ bids “failed to meet the government’s reserve price”, according to a statement by the Lands Department. It is the second-largest commercial parcel of land in Kai Tak.

Kai Tak Area 2A Site 4, Site 5(B) and Site 10 is located near the proposed Sung Wong Toi MTR station and the Kai Tak Sports Park. Valuers had cut their estimate for the plot by as much as 20 per cent, to a range between HK$6.38 billion (US$823.2 million) and HK$10.44 billion. The Lands Department’s reserve price was “out of touch” with the wider market, one of them said on Wednesday.

The withdrawal, the third involving a commercial plot at Kai Tak and fourth overall in Hong Kong since January 2018, underscored the depressed mood in the world’s most expensive real-estate market, with the economic aftermath of the coronavirus pandemic adding to business disruption stemming from almost a year of anti-government protests.

“The withdrawal is disappointing. It reflects the big difference between developers and the government”, when it comes to the outlook for Hong Kong’s commercial market, said Thomas Lam, executive director at Knight Frank.

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Hong Kong’s economy shrank by 8.9 per cent year on year in the first three months of 2020 for its worst quarter on record. It was also a second successive quarterly contraction, which confirms that the city’s economy is in recession. Home prices have retreated by 8.1 per cent on average from a peak in June 2019, according to the Centa-City Leading Index, with some consultants predicting as much as a 20 per cent slide by the end of this year.
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