Small Hong Kong developers spend US$2.6 billion in land, property acquisition binge in past 12 months

Hong Kong’s small and mid-sized developers are accelerating their pace of accumulating land banks as they bet on an economic revival and chronic housing shortage to keep home prices at elevated levels.

Wang On Properties, Kowloon Development, HKR International and Lai Sun Development have invested nearly HK$20 billion (US$2.6 billion) in the past 12 months to acquire properties in the private market for redevelopment, government tender and settling land premiums to the government to boost their land holdings.

“We did participate in government tenders, but fierce competition has pushed up land cost and squeezed our profit margin,” said Wang On’s chief executive and executive director Nick Tang Ho-hong, who is also the son of the firm’s controlling shareholder Tang Ching-ho. “Acquiring existing buildings for redevelopment is a preferable option for us.”

The firm made a major acquisition in October last year, buying the Sing Pao Building in Fortress Hill for HK$1.88 billion through a joint venture with Cifi Holdings, a Chinese real estate development company. The partners plan to redevelop it into a residential project mostly consisting of two-bedroom flats.

Besides residential development, Wang On has increased its footprint in investment property. In August, it acquired the eight-storey Jumbo Court Carpark comprising 509 parking spaces near Wong Chuk Hang MTR station for HK$401 million from casino operator Melco International Development’s subsidiary Aberdeen Restaurant Enterprises. A month later, it sold a 50 per cent stake to real estate fund Angelo Gordon.

In April, Wang On teamed up with Roland Chiu, son of CK Asset Holdings executive director Justin Chiu, to buy 13,858 square feet of retail property at The Parkville development in Tuen Mun for HK$300 million from New World Development.