Bids for US$970 million Mansfield Road plot on Peak in line with expectations, hint at optimism, analysts say

Number of bids within expectations; all big developers, says Thomas Lam of Knight Frank
Wharf, which won tender for 2,4,6 and 8 Mansfield Road in December, is expected to have put in another aggressive bid

Asia housing and property

Cheryl Arcibal

Published: 6:57pm, 5 Feb 2021

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The five bids for a rare plot of land in Hong Kong’s upmarket The Peak district were in line with expectations and hinted at optimism about the city’s luxury residential market, analysts said.

The government tender for the plot at 9 and 11 Mansfield Road closed on Friday, and could fetch up to HK$7.5 billion (US$970 million). The land is next to 2,4,6 and 8 Mansfield Road, where some of Hong Kong’s civil servants were previously housed.

“The number of bids was within my expectations of between five and seven bidders. All of them are big developers,” said Thomas Lam, executive director and head of valuation and advisory at property consultancy Knight Frank. “I think it is an attractive investment, as the luxury residential supply at The Peak is very limited. Residential supply in Mid-Levels or The Peak only accounts for less than 0.2 per cent of total future supply between this year and 2025,” he added.

Interest in the plot comes amid the worst contraction on record in Hong Kong’s economy, which declined 6.1 per cent last year as the coronavirus pandemic pushed up unemployment in the city. It hints at optimism over the luxury residential market, which saw an annual rental decline of 11.5 per cent last year after companies cut salaries and housing allowances, according to real estate services provider Savills.

Wharf (Holdings) won the tender for 2,4,6 and 8 Mansfield Road after submitting a higher-than-expected HK$12 billion bid in December. Its land bank in the area exceeds 500,000 sq ft, which makes Wharf one of the largest owners of land in the district. The developer was among the five bidders on Friday – along with CK Asset Holdings, K Wah International Holdings, Sun Hung Kai Properties and Henderson Land Development – and is expected to have put in another aggressive bid.

The government-owned Quarters Premises in Mansfield Road, where Hong Kong’s civil servants were previously housed. Photo: Winson Wong

The plot tendered on Friday is valued at HK$45,000 to HK$52,000 per square foot, according to agents, and the winning bidder is expected to potentially sell and market it at more than double the price, at HK$120,000 per square foot, after developing the site.

Although the plot, at 54,541 sq ft with an estimated gross floor area of 144,970 sq ft, is smaller than the previous plot sold to Wharf, its location makes it more valuable to developers building up their land bank. The Peak is home to properties owned by the likes of Jack Ma, founder of Alibaba Group Holding, which owns this newspaper, and casino heiress Pansy Ho.

The winning bidder can apply for lease modifications, according to the land sale documents. This will allow the sharing of recreational facilities and parking spaces between the plot tendered on Friday and the land won by Wharf, effectively reducing construction costs.

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