Kai Tak site sold for $12.74b in cheapest land sale in three years

A joint venture led by Wheelock Properties and COLI bought the site.

A joint venture between Wheelock Properties, K Wah International Holdings and China Overseas Land and Investment (COLI) has won the tender for a 176,366-sqft residential site in Kai Tak development area for $12.74b (US$1.63b), according to an announcement by the Lands Department.

Kai Tak Area 4A Site 1, part of the former runway at Kai Tak airport, was sold for $11,841.70 psf. The sale is said to be the cheapest acquisition amongst land transactions in Kai Tak in the last three years.

The land parcel can accommodate 1,500-2,500 luxury apartments that could be sold for over $26,000 psf upon completion. The winning bidder is required to incorporate facilities for an elderly care home and a childcare centre in the development, which is expected to cost approximately $20b.

The consideration was below projected valuations almost two months after deteriorating civic order in Hong Kong, observed real estate news source Mingtiandi, adding that builders are also seen to be hampered by recent policies put in place to discourage speculation in housing.

Also read: Kai Tak home plot's floor price sinks 18% to $8.33b

“With the impending vacancy tax, a slow flat sales performance would potentially dampen developers’ profit, as such discounts have been taken into account in land bid prices,” said Thomas Lam, executive director of valuation and advisory at Knight Frank Hong Kong, in a statement to Mingtiandi.

In May, Wheelock already teamed up with mainland developer COLI and four other Hong Kong developers to snag the third largest residential plot in Kai Tak for $12.6b. It was also involved in buying embattled Chinese conglomerate HNA’s last piece of land at the former airfield in February, which saw the latter at a $740m (US$94m) loss.

Earlier, the government announced plans to build roughly 12,600 public housing flats on seven sites in the Kai Tak development area by 2026 as part of efforts to ease the city’s chronic housing crunch.