A series of recent demonstrations have hit Hong Kong’s retail and tourism industries, affecting developers’ bids for commercial land
The Kai Tak Road commercial/hotel site was acquired by Far East Development (00035) for over $2.445 billion. The floor price of each floor was only about $7,100, which was about 11.3% lower than the market valuation limit.
The valuation of Kaide Chengqi Road commercial/hotel land (arrow mouth) has been lowered
The commercial/hotel site is adjacent to Kai Tak Sports Park and can be built with a total floor area of approximately 344,000 square meters. The area of the hotel is not less than 155,000 square feet. Last week, the bidding response was enthusiastic, and a total of 10 bids were received. Other funded consortiums include Sun Hung Kai Properties (00016), Cheung Kong Group (01113), Wheelock Properties, Jianye Real Estate, China Overseas Development (00688), etc. I believe that some consortiums will enter the standard with a mindset.
It is planned to build office buildings and hotels
Due to a number of negative factors in the social and economic sectors, land valuations have long been lowered by the market, with a minimum expected of about 8,000 yuan per party. In the competition of many consortiums, the transaction price is lower than the downward adjustment. It not only reflects that other developers’ bids are more conservative, but also shows that the government has adjusted the land reserve price.
Fang Wenchang, Director of Development of Far East Real Estate, said that the Group is very pleased to be able to win the land. In the future, the area will benefit from the Hong Kong-Tiesa Central Line and Route 6 and it is optimistic about its development prospects. It is planned to build an office building and a hotel, each accounting for about half of the total floor space, providing about 400 hotel rooms. The estimated total investment is about 4 billion yuan.
In fact, the prospects of the property market are uncertain. The tenderness of the commercial land launched by the government this year has been unsatisfactory. For example, in the 4th District, No. 5 commercial/hotel site, which received 9 tenders in January this year, the tender bid did not meet the requirements. And the flow mark.
Subsequently, the same type of land in Area 4C, No. 4, was approved in May for more than 11.12 billion yuan. The price was about 12,888 yuan, which was once the Kowloon East New Height. However, the winning bidding consortium, Gao Yin Finance (00530), was ordered in June due to social instability. The land has been re-pushed and will be closed next month, but the valuation has been greatly reduced by the market, and each side has been reduced to about 8,500. Yuan, that is, significantly lower than the original bid, more than 30%.
Lin Haowen, executive director and director of valuation and consulting at Knight Frank, believes that although developers still have confidence in the Hong Kong property market, commercial land has always relied on market consumption power. Therefore, under the influence of recent social movements and Sino-US trade wars, the consortium In bidding for this type of non-separable sale of commercial land, the bidding trend turned conservative. It is expected that the long-term rental return rate of the approved land will be about 4% and the fund recovery period will be about 15 years.