Hong Kong development giant Sun Hung Kai has bought a hotel site in Cheung Sha Wan for $5.06 billion ($648.8 million), blowing past market expectations for the waterfront parcel and setting a per square foot price record for the city’s Kowloon area.
The tender for the 4,880 square metre (51,557 square foot) site on a 50-year land grant was awarded to Fedder Limited, a unit of Sun Hung Kai Properties, according to an announcement on the Lands Department website. Hong Kong’s biggest developer by market cap shouldered aside nine other bidders for the prized parcel, paying 35 percent more than the top end of the previously reported offers, which were said to range from HK$2.17 billion ($278 million) to HK$3.74 billion ($479 million).
The site, New Kowloon Inland Lot No 6550 off Hing Wah Street West, is earmarked for a hotel building up to 100 metres tall, with a maximum gross floor area of 34,770 square metres (374,261 square feet). The selling price equates to HK$13,520 ($1,733) per square foot of buildable area, surpassing the HK$12,863 per square foot that Hong Kong’s Nan Fung Development paid for a commercial site near Kowloon’s former Kai Tak Airport this past May (with a total price tag of HK$24.6 billion).
Sharp Competition for Waterfront Hotel Site
Sun Hung Kai beat nine other bidders for the piece of land overlooking Victoria Harbour, including CK Asset Holdings, Regal Hotels International, Henderson Land Development, Sino Land Company, K&K Property Holdings, Far East Consortium International, Babenna Limited (Magnificent Hotel Investments), Billion Real Estate Holdings, and Stanford Hotels Enterprises Limited (a hospitality arm of Hong Kong’s K. Wah Group) – all Hong Kong-based firms.
Located near the Nam Cheung MTR station, the hotel plot overlooking Victoria Harbour lies adjacent to a residential site which is also up for tender. New Kowloon Inland Lot No 6549, which has been valued at HK$10 billion, has a site area of 19,348 square metres (208,260 square feet) and could yield up to 91,770 square metres (987,804 square feet) of housing. Bidding is due to close on Friday, November 10th and market analysts predict that a consortium bid may aim to coordinate development on the two neighbouring sites.
The fierce competition for the hotel site underscores the growing investor interest in Cheung Sha Wan, part of the emerging Kowloon West business hub which is preparing for an influx of millions of square feet of office space. New World Development has scooped up three commercial sites in the area this year for a total of HK$15 billion ($1.92 billion).
Sun Hung Kai To Boost Hotel Portfolio
Sun Hung Kai has a wide-ranging portfolio of apartments, retail and office properties in Hong Kong and mainland China, including large-scale mixed-use projects in Shanghai, Beijing and Guangzhou. The group also boasts a collection of high-end hotels including the Four Seasons Hotel Hong Kong at IFC, the W Hong Kong at Kowloon Station, and Ritz-Carlton hotels in Hong Kong and Shanghai.
The Hong Kong-listed group chaired by Raymond Kwok lists six hotels under development on its corporate website, including four in mainland China and two in Hong Kong – the Hotel Vic, North Point and a four-star hotel in Shatin, totalling 1,359 rooms.
The developer is set to launch Victoria Harbour in North Point, a five-tower, 355-unit condo project that is expected to have some of the most expensive apartments in Hong Kong. Sun Hung Kai Properties posted a 57 percent increase in first-half profit on the back of strong home sales.