Lohas Park phase 13′s massive investment outlay likely to attract bids only from top developers and consortiums

29-Oct-2020 Intellasia | South China Morning Post | 6:02 AM Print This Post

More than half of the companies that had shown an interest in bidding for the last parcel of land in Hong Kong’s largest residential enclave are expected to stay away, as developers weigh the project’s heavy investment outlay against the city’s weak economy.

Industry observers expect only around 10 heavyweight players or consortiums to submit bids for phase 13 development of Lohas Park in Tseung Kwan O when the tender closes on Thursday. The plot, which can yield a total gross floor area of 1.55 million sq ft, can yield up to 2,550 flats.

A record 35 companies had submitted expressions of interest in late September, including Hong Kong majors like Sun Hung Kai Properties, CK Asset, Henderson Land Development, New World Development, Wheelock Properties and Sino Land. Mainland developers eyeing the plot include China Overseas Land & Investment, Country Garden and Longfor Group.

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“As the scale of the project is rather large, apart from major developers, there may be bids from consortiums and partnerships between local and mainland developers,” said Alvin Lam, director of Midland Surveyors.

Hong Kong’s property sector has felt the impact from an economy that has contracted for four straight quarters. Sales first took a hit from the anti-government protests followed by the Covid-19 outbreak, which put pressure on housing prices. However, recent uptake of new property projects has shown that buyers are putting aside concerns surrounding the weak local job market and recent lay-offs at Cathay Pacific Airways. Financial Secretary Paul Chan Mo-po even suggested the city’s recession abated last quarter.

“Developers will not be too aggressive in bidding, considering that the pandemic may further affect future economic performance and thus affect purchasing power,” said Thomas Lam, executive director at Knight Frank.

The project’s winning developer will have to pay a premium of HK$5.57 billion (US$718.44 million), or a record HK$3,600 per sq ft, to the government. The previous record was HK$3,194 per sq ft, which was paid by a consortium led by Sino Land for phase 11 in Lohas Park. Separately, the developer will have to share at least 15 per cent of the project’s profit with MTR, which has the rights to the land.

The project that will come up on the plot is likely to be one of the biggest in the Hong Kong after the 3,090-unit Pavilia Farm in Tai Wai, requiring an investment in the region of HK$17 billion to HK$20 billion, according to Midland’s Lam.

Nan Fung Development is among those considering a bid for the parcel. Geoffrey Lo, general manager of property development department and sales department, said last week that the record premium reflects the “mature amenities and development” of the area. Its LP6 development in Lohas Park has sold over 98 per cent of the 2,392 flats at an average price of HK$16,300 per sq ft, pulling in HK$19.2 billion.

Lai Sun Development, which is also mulling a bid for the plot, expects flats in the latest phase to be priced in the HK$17,000 to HK$20,000 range. Currently, prices in the district average around HK$13,014, according to Centaline Property Agency.

“I am optimistic about [phase 13] prospects,” said Julian Poon, senior vice-president at Lai Sun.

He added that the project will be popular as the traffic infrastructure improves and other amenities like shopping centres and construction work on other projects are completed by the time flats in phase 13 are delivered.

Improved infrastructure, such as the Cross Bay Link, a bridge connecting Lohas Park with Tiu Keng Leng and Tseung Kwan O-Lam Tin Tunnel, which is likely to open in 2022 will shorten travelling time and boost home prices in the area, Midland’s Lam said.



Category: Hong Kong

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