CBRE: Hung Shui Kiu District Land Priced 566 yuan/sq ft, But Actual Costs Far Higher
AM730 · 1 SOURCESabout 2 hours ago3 MIN
Summary
CBRE's Hong Kong Valuation and Advisory Services Executive Director and Head, Zheng Haiyan, has provided analysis on the Hung Shui Kiu district tender results, revealing that while the residential land price appears low at 566 yuan per square foot, the actual development costs are substantially higher. The winning consortium of six major developers secured the tender for a total land price of 1.03 billion yuan, with a comprehensive development project covering 2.37 million square feet of gross floor area. The project includes not only residential development but also extensive site formation requirements and enterprise and technology facilities construction, with total investment reaching 16.8 billion yuan over an estimated 55-month development period.
Key Points
- The winning consortium comprises six major developers: China Overseas Development (688), China Merchants Land (978), China Resources Land (Overseas), China Tourism Group Investment Operations, JD.com (9618), and Sino Land (083), forming a joint venture
- The tender covers Hung Shui Kiu and Ha Tsuen Lots 18, 20, and 21 for residential use, plus Lot 19 for enterprise and technology park purposes, with a total land price of 1.03 billion yuan payable in a single advance payment
- Maximum residential gross floor area totals 1,819,939 sq ft, while enterprise and technology GFA reaches 548,421 sq ft, resulting in a blended accommodation value of 435 yuan per sq ft
- When calculated solely on residential GFA, the price appears as 566 yuan per sq ft, but Zheng emphasizes that focusing only on residential land value ignores the project's overall scope and complexity
- The consortium faces obligations for large-scale site formation works and E&T facility construction, meaning residential profits are expected to subsidize the broader technology-focused development
- Technical evaluation criteria weighted partnership strength heavily, and the participation of the Chinese enterprise provided significant competitive advantage and technological credentials to the consortium
- CBRE suggests future Northern Metropolis tenders could benefit from longer preparation periods or rolling tender arrangements, as many potential E&T users and partners lacked adequate time to form suitable consortiums
- Upon completion of site formation works on Lots 23 and 24, the winning developer will inject these lots at nominal land price into a newly established Hung Shui Kiu Industry Park Company Limited before returning them to the government
Why It Matters
The Hung Shui Kiu district tender sets a critical precedent for future Northern Metropolis land auctions, demonstrating how complex mixed-use developments integrating technology infrastructure require longer planning cycles and strategic partnership arrangements. This outcome signals the government's commitment to attracting major technology players like JD.com to drive innovation in Hong Kong's new growth engine, while also highlighting the financial engineering required to make such ambitious projects commercially viable.
The Hung Shui Kiu district tender sets a critical precedent for future Northern Metropolis land auctions, demonstrating how complex mixed-use developments integrating technology infrastructure require longer planning cycles and strategic partnership arrangements. This outcome signals the government's commitment to attracting major technology players like JD.com to drive innovation in Hong Kong's new growth engine, while also highlighting the financial engineering required to make such ambitious projects commercially viable.