The Hong Kong government’s failure this week to sell commercial land in Kowloon City is a double blow to the real estate market. The sole bid, by CK Asset Holdings, shows developers remain wary of the outlook, and the government’s urban renewal efforts in the area have stalled.
The Urban Renewal Authority (URA) on Tuesday rejected a joint venture proposal for the Kai Tak Road-Shapo Road site from CK Asset, a development company run by the billionaire Li Ka-shing family. It added that the bid contained additional conditions that deviated from the development plan. Hong real estate company officials said the developer was unable to come up with a bid that would generate a reasonable level of profit based on the terms of the bidding documents. Kong suggests that development costs may be too high. Moreover, Knight Frank said the property market performance remained poor in September, with price pressure still on. The aim is to redevelop it. Photo: Dixon Lee
“URA is already offering potential bidders some flexibility, such as installment payments,” said Vincent Chan, managing director of Vincone Consulting and Appraisal. “The reserve price cannot be significantly reduced to match market bidding.”
The cost of acquiring a site can be inflated by the amount spent assembling all individual or strata title units before offering to co-develop them with other partners. URA will also need to raise its own funds to carry out the project, most recently through a HK$12 billion (US$1.5 billion) bond sale in August, Cheung added. .
Under its charter, this statutory body is tasked with improving the standards of housing and the built environment, including through urban renewal programmes. In 2023-24, there was a deficit of HK$3.9 billion, the second consecutive year of imbalance. Operating deficits of HK$830 million contributed to the shortfall, along with HK$3.1 billion of provisions for projects that may be devalued.
The Kai Tak/Sa Po road tender had received 30 expressions of interest from developers and business groups before the tender opened. The 5,307 square meter site will allow for the construction of 810 homes and will require the construction of a “sunken plaza” that will connect to the planned underground shopping mall.
