Developers pick up Kai Tak’s most valuable harbourfront land plot at 27 per cent discount as protests send property market into tailspin

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China Overseas Land & Investment, Henderson Land Development, K. Wah International Holdings and Wharf Development together paid HK$15.95 billion (US$2.04 billion) for Area 4A Site 2 at Kai Tak

The winning bid translates to HK$13,238 per square foot, barely meeting the lower end of valuations, which had already been cut by 20 per cent from June

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Aerial drone view of Kai Tak on 27 September 2019, where residential buildings are under construction. Photo: Martin Chan

Lam Ka-sing

Published: 6:45pm, 13 Nov 2019Updated: 10:44am, 14 Nov 2019

A consortium of Hong Kong developers bought the most valuable parcel of residential land on the runway of the city’s former airport for a discount, as six months of the city’s worst political crisis sent the local property market into a tailspin.

China Overseas Land & Investment, Henderson Land Development, K. Wah International Holdings and Wharf Development together paid HK$15.95 billion (US$2.04 billion) for Area 4A Site 2 at the former Kai Tak airfield, barely meeting the lower end of a price range expected by valuers, according to data released by the Lands Department.

The price of the winning bid translates to HK$13,238 per square foot, 26.8 per cent cheaper on a per square foot basis than the adjoining, oceanfront Area 4C Site 1 that sold in June for HK$12.9 billion, or HK$18,080 per sq ft, to China Resources Land and Poly Property Group. The plot can yield 1.2 million square feet (111,483 square metres) in gross floor area, equivalent to nearly 19 football fields, where an estimated 1,500 flats can be built.

“The winning price is lower than expected, which means developers are relatively pessimistic about market prospects, fearing the market sentiment and vacancy tax will affect profits, though it can be a large project with sea view,” said Thomas Lam, executive director at Knight Frank. “The price is indicative of the trend in land prices. Developers will become more cautious and selective in land buying.”

A history of land sales in Hong Kong’s former airport at Kai Tak. Source: SCMP

Lam added the low price means the government has become more in sync with the market with its reserve price.

Stewart Leung, vice-chairman of Wheelock and Company, Wharf Development’s parent, said the price was “reasonable” amid the current market sentiment, and the sizes of the flats that will be offered had not been decided yet.