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More skyscraper(s) likely coming after the successful auction of the plot next door.

SHKP $5.56b wins West Kowloon site
Hong Kong Standard
13 June 2007
The Standard

Sun Hung Kai Properties (0016) bagged a prime seaview site in West Kowloon for HK$5.56 billion as it threw caution to the wind amid sluggish bidding from developers concerned about the high reserve price and the prospect of a judicial review related to the site.

The price was 32 percent above the opening bid of HK$4.2 billion, but was at the lower end of market estimates.

This was despite the Hoi Fai Road site offering a sea view, unlike another West Kowloon site, at Yan Cheung Road, which sold last month for HK$4 billion or 54 percent above the opening bid.

In terms of accommodation value the Hoi Fai Road site, which was triggered for auction last month by Wheelock Properties (0049), stood at HK$6,066 per square foot, lower than the Yan Cheung Road site at HK$6,147 psf.

An SHKP spokeswoman confirmed it had won the site as sole bidder but could not offer details such as the total investment required.

Developers had mixed views of the final bid, with Peter Woo Kwong-ching, chairman of Wheelock Properties (0049), saying it was a good market price, while Cheung Kong (Holdings) (0001) deputy chairman Victor Li Tzar- kuoi commenting that it was quite high.

``The price is within expectation, although maybe at the lower range,'' said auctioneer Chris Mills, the Lands Department assistant director.

He declined to comment on whether a judicial review application filed Monday by a Sham Shui Po resident had affected the sentiment of developers. The writ accuses the Town Planning Board and Lands Department of not following guidelines to promote health and welfare during planning and urged the rezoning of the plot.

``Bidders would have factored it in the bids if they saw any justifications or risks attached because of the judicial review,'' Mills said.

The Lands Department also warned potential bidders before the auction that the Town Planning Board had received an application to lower the plot ratio for the domestic portion from 6.5 to 5 and to impose a height restriction on part of the site to allow better ventilation.

The plot, sandwiched between One Silversea and The Long Beach, has a site area of 122,204 sq ft and provides a total gross floor area of 916,522 sq ft, of which 794,319 sq ft is residential.

``The result ... was at the lower end of market expectations, mainly due to the recent legal issues,'' said Tony Chan Tung-ngok, executive director at Vigers Appraisal and Consulting.

Centaline Property Agency research department associate director Wong Leung-sing reckoned the opening bid price was already very high, with reference to existing secondary market prices in the area.

``They are already very brave to go to this [final] price,'' said Wong, noting the very tight site, limited seaview and the possible judicial review.

Midland Surveyors director Alvin Lam Tsz-pun said the final price was about right as it was similar in accommodation value to the Yan Cheung site.

Lam noted it was 11 percent higher than two inland West Kowloon sites sold in September 2005 at an accommodation value of about HK$5,400 psf.

Midland Realty sales director for Kowloon Jeffrey Wai Man-chun said the accommodation value of HK$6,066 psf was about 20 to 30 percent higher than prevailing secondary market prices at Olympic station and would allow prices in West Kowloon to consolidate.

Wai believes SHKP could sell the units at between HK$9,000 and HK$10,000 psf.

Cheung Kong deputy chief manager for sales Francis Wong See-chung said Tuesday, in expectation of a good auction result, the developer would revise upwards its indicative selling price for the initial batch of units for its upscale Celestial Heights project at Ho Man Tin from HK$13,000 psf to more than HK$14,000. The project is awaiting pre-sale approval.