The Lantau plot lies opposite Swire’s Whitesands development (Image: LWK and Partners)
Hong Kong’s Lands Department on Wednesday awarded a residential development site on Lantau Island to Sino Land for HK$203.9 million ($26.1 million), defying expectations that the tender might be withdrawn.
The builder controlled by tycoon Robert Ng was the sole bidder for the 50-year land grant of Lot 722 in Demarcation District 332, the Lands Department confirmed in a release.
The low-density site, an irregularly shaped plot next to a campground on Tung Chung Road in Lantau’s southern Cheung Sha area, measures 204,516 square feet (19,000 square metres) and can yield up to 81,806 square feet of gross floor area across two storeys. The land lies opposite Swire Properties’ Whitesands, a fully sold residential development, and is expected to yield 110 homes.
“This is a remote location in the southern part of Lantau Island,” Alex Leung, chief surveyor at CHFT Advisory and Appraisal, told Mingtiandi after the tender’s closing last Friday. “With the benefits of a tranquil environment and the proximity to beaches, buyers and tenants are mainly looking for vacation homes.”
Well Below Market Views
Sino Land’s HK$203.9 million premium translates to an accommodation value of HK$2,492 per square foot, falling well short of market views.
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The expectation before the tender opened on 17 November was in the range of HK$410 million to HK$700 million ($52.6 million to $89.8 million), or HK$5,000 to HK$8,600 per square foot, according to Colliers.
Demand in the area has declined due to high interest rates and a lack of demand for vacation houses, Leung said. He noted the comments made to the media last week by Victor Lui, deputy managing director of Sun Hung Kai Properties, who said developers face high costs and difficulty hiring construction workers when dealing with such remote sites.
From 2017 to 2019, development sites in southern Lantau routinely drew six to 12 bids from various developers, but the sale market saw just three or four house transactions annually in the second-hand market during the last three years, Leung said.
Aggressive Campaign
Sino Land has been the most aggressive bidder in government land sales of late, with the developer and partners China Merchants Land and Great Eagle Holdings winning a tender last week for a project in Kowloon’s Kai Tak area with a bid of HK$1.93 billion ($250 million).
A Sino Land-led consortium also won the previous land sale in Kai Tak in September.
In southern Lantau, Sino Land bought a smaller site for HK$203.9 million in 2018. That development is due to be completed next March, comprising a total gross floor area of 11,600 square feet, according to Colliers.
