Hong Kong’s largest developers, and richest families, pile into blockbuster seafront land sale in nod to city’s outlook
Sun Hung Kai Properties, CK Asset Holdings, Henderson Land Development, Wheelock’s Wharf unit, Sino Land and the Great Eagle Group are bidding for Site 3 at Connaught Place
The land measuring 516,316 square feet, which can yield 1.61 million square feet of gross floor area, is valued at between HK$37 billion and up to HK$55 billion
Half a dozen real estate developers owned by Hong Kong’s wealthiest families have thrown their hats into the ring to bid for the largest plot of harbourfront commercial land in Central, in a test of the property market that offers a peek into the city’s future standing as an Asian financial hub.
Sun Hung Kai Properties (SHKP), Hong Kong’s largest developer by market value, controlled by the Kwok family, confirmed that it submitted a bid for Site 3 at Connaught Place in Central, a 516,316 square feet (47,970 square metres) plot that includes the 1976 General Post Office. The land parcel, which can yield 1.61 million square feet of gross floor area, has been valued at between HK$37 billion and up to HK$55 billion (US$7.1 billion), topping the scales as the most expensive plot in a city used to setting price records.
“Most of the big developers are taking part in the tender process, which shows their long term confidence in Hong Kong’s economic outlook,” said Knight Frank’s executive director Thomas Lam, who had expected between three to five bids. Total development cost could top HK$65 billion inclusive of the land cost, he said.
Hong Kong’s economy grew at a larger-than-expected pace of 7.9 per cent in the first three months, the fastest quarterly pace in 11 years compared with a low base last year, as the city claws its way out of its worst recession on record. Two years of economic slump - the coronavirus pandemic in 2020 after the street protests of 2019 - are casting doubt on the city’s viability as a financial centre, as increased emigration and sporadic rumours of capital flight - dispelled by local authorities - weigh on the city’s future.
CK Asset Holdings, one of the two flagship companies owned by Hong Kong’s richest tycoon Li Ka-shing, submitted a bid. Henderson Land Development, founded by the second-richest tycoon Lee Shau-kee is also taking part. Wharf Real Estate Investment Company, a unit of the Woo family’s Wheelock and Company Limited, said it submitted a bid in a consortium with the city’s subway operator MTR Corporation and ChinaChem Group.
Sino Land, controlled by the family of Robert Ng Chee Siong, submitted a joint bid with Great Eagle Holdings of the Lo family, as well as the Chinese state-owned enterprise China Merchants Group.
Hongkong Land, the largest commercial landlord in Central and a unit of the conglomerate Jardine Matheson, declined to say if it submitted a bid.
A drone view of Site 3 at Connaught Place in Central, framed by the General Post Office in the top left corner, the Star Ferry terminal to the right, the International Finance Centre (IFC) outside the photograph at the top, as of June 10, 2021. Photo: Martin Chan
The sale of the land by the Hong Kong government is also a crucial test of the so-called two envelope approach, which awards the winning bid on the merit of designs, planning and their congruence with the surrounding environment, in addition to beating the minimum reserve price. The approach gives well-planned bids a chance of winning, breaking the upwards spiral of prices that have kept Hong Kong as the world’s most expensive urban centre to live and work in.
“The system is likely to influence the result of the tender, as some bidders have invested significantly to come up with outstanding designs that include innovative ideas and technical [content],” said Colliers’ head of valuation and advisory services Hannah Jeong in Hong Kong.
Site 3 at Connaught Place is valued between HK$22,980 and HK$34,000 per square foot. On a square-footage basis, Henderson’s 2017 purchase of the Murray Road car park for HK$23.28 billion translated to a record HK$50,064 per square foot.
Hong Kong’s Lands Department will announce the winning bid on, or before November 12, according to a spokesperson, adding that six bids were received.
Sun Hung Kai, capitalised at HK$346 billion, is the record holder of the most expensive plot of land ever sold in Hong Kong. The developer paid HK$42.23 billion, or HK$13,345 per square foot in November 2919 for a parcel of land earmarked for office-retail use on top of the West Kowloon high-speed railway terminus on Austin Road.
Five months after winning the bid, Sun Hung Kai and controlling shareholder Kwok family, sold 30 per cent of the office component of the project for HK$11.27 billion to China’s largest insurer Ping An Insurance Group, keeping all of the retail portion. SHKP owns half the offices, Ping An owns 30 per cent while the Kwok Family Companies own the remaining 20 per cent.
