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Hong Kong land sale
Business

Outlook dims on Kai Tak’s waterfront land as Hong Kong’s Northern Metropolis plan and land conversion add to city’s supply glut

  • Five plots of housing land at Kai Tak, valued at a combined HK$71.3 billion (US$9.15 billion), may fail to live up to expectations when they go on sale, analysts said
  • One of the plots was sold last week at a discount of 10.8 per cent from its purchase price in 2018

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The runway of Hong Kong’s former Kai Tak airport site protruding into Victoria Harbour. The site has been converted into a residential, commercial and retail area as an important part of the transformation of East Kowloon into a central business district. Photo: Martin Chan
Lam Ka-sing

A distressed sale last week at Hong Kong’s former Kai Tak airport site has clouded the outlook of the city’s property market, as an expected glut of residential land weighs on prices.

Five plots of land at Kai Tak, valued together at up to HK$71.3 billion (US$9.15 billion), may fail to live up to expectations when they go on sale, analysts said. The parcels - yet to be converted from commercial land into residential usage - can yield about 5,800 average-size flats, according to the rezoning proposal in Hong Kong’s 2021-2022 budget announced in February by Financial Secretary Paul Chan Mo-po.
Another factor that puts a cap on prices is the city government’s plan to develop the Northern Metropolis in the New Territories, where at least 900,000 homes may be built over the next 20 years to accommodate 2.5 million people and alleviate Hong Kong’s crowdedness.

“Land prices may soften, rather than be on the rise,” said Lau Chun-kong, managing director at Colliers International and Chairman of the Land Policy Panel at the Hong Kong Institute of Surveyors (HKIS). “The likely supply in Kai Tak and the Northern Metropolis will relieve upwards pressure. The [slump] in the stock market will also make developers more prudent in making their bids.”

Hong Kong’s Land Supply Over the Next 30 Years. SCMP Graphics
Hong Kong’s Land Supply Over the Next 30 Years. SCMP Graphics

Kai Tak, where Hong Kong’s main airport operated from for more than seven decades until 1998, measures 323 hectares (798 acres). It is an important part of the transformation of eastern Kowloon into a central business district to sustain the city’s development, first outlined in 2011 by former Chief Executive Donald Tsang.

Since then, Kai Tak has grown into an upscale residential area, especially on the narrow strip of land protruding into Victoria Harbour where the former airport runway was, as it offers seafront view on three sides. KWG Group Holdings and Longfor Group have launched their Upper Riverbank apartments, where a four-bedroom ground floor flat with a garden sold in October for HK$79 million.

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