A Sino Land-led consortium won a residential site in West Kowloon for a less-than-expected HK$4 billion yesterday after the government issued an unprecedented warning to developers over their conduct during the bidding.
Last week, the Lands Department sent a letter to the Real Estate Developers Association reminding developers they must "behave properly" during the auction - which was interpreted as a warning against colluding during the bidding process to keep down prices.
At the last major sale, in March, Sino Land acquired a Tai Po site after its chairman, Robert Ng Chee-siong, was seen during the bidding holding discussions with Nan Fung Development. The privately owned Nan Fung then dropped out of the bidding and after the auction the two companies announced they would jointly develop the site.
Sino Land and Nan Fung were the major partners in yesterday's winning consortium, which also comprised K Wah International and Chinese Estates Holdings. They secured the 86,758 sq ft site on the 29th bid of the auction for HK$6,147 per square foot yesterday, about 10 per cent less than analysts estimated.
Seven developers, including New World Development, Cheung Kong (Holdings) and Wheelock Properties entered bids. The only other bidder remaining after offers reached HK$3.5 billion was New World .
By joining hands ahead of the auction, developers avoided bidding up the price before eventually forming a joint venture, analysts said.
"The site could have fetched HK$4.5 billion if there was more competition. The property market is strong, but there were only two main bidders," Professional Property Services chairman Nicholas Brooke said.
News of the disappointing land auction result helped push the Hang Seng Index down 190.29 points to close at 20,706.3. Shares of Sino Land fell 0.67 per cent to close at HK$17.78.
Mr Brooke said developers also held back to save money for upcoming sales, including another West Kowloon site next month.
The joint venture plans to use the site for luxury housing.
Alnwick Chan Chi-hing, executive director of Knight Frank, expected the venture could make a reasonable profit if the flats were sold for an average of HK$8,500 per square foot. Nearby properties go for between HK$5,200 and HK$20,000 per sq ft, according to agents.
Auctioneer and assistant director of lands Jim Merritt came in for criticism yesterday for not lowering the bidding increment from HK$50 million during the 40-minute auction even though the bidding process was not tense. In previous sales for similar valued sites, the auctioneer has lowered the increments near the end of the process to arouse interest.
Charles Chan Chiu-kwok, managing director of Savills Valuation and Professional Services, said reducing the bid increment to HK$20 million could have pushed up the sale price by as much as 30 per cent.
But Mr Merritt was happy with the result. "We are satisfied with the reasonable price which reflects the valuation of that particular land."
The price was 53.6 per cent higher than the opening bid of HK$2.07 billion and 13.68 per cent higher than the price paid by a Sino Land-led consortium for two West Kowloon sites in 2005.
Following is a question by the Hon Martin Lee and a written reply by the Secretary for Housing, Planning and Lands, Mr Michael Suen, in the Legislative Council today (May 9):
Question:
It has been reported that last month, a real estate developer and two art groups jointly submitted an application to the Town Planning Board for planning permission for a development project, which includes a 33-storey hotel, shops as well as art and cultural facilities (exhibition hall and studio theatre), on the Ex-A-King Slipway Site and the adjoining government land in Causeway Bay. In this connection, will the Government inform this Council whether it knows if the authorities concerned:
(a) have requested the applicants to provide an assessment report on the following aspects of the development project: (i) the need for reclamation or piling works to be carried out at any shore or sea-bed, (ii) the impact of the proposed hotel development on air ventilation to the inland buildings, on the view from the sea to the waterfront, on the panoramic view from the inland buildings, and on the traffic conditions of the nearby residential areas, as well as (iii) whether the site concerned has been contaminated; if they have, of the results of the assessment and the channels through which members of the public may access the relevant report; if not, whether they will make such a request; and
(b) have studied the impact on the view corridor in the district upon completion of the buildings of the project; if they have, of such impact (with illustrations);
(c) have studied if the proposed 33-storey hotel of the project has breached the stipulation in the Urban Design Guidelines of the Hong Kong Planning Standards and Guidelines that taller buildings should be located inland, with lower developments along the waterfront; and
(d) have posted notices and the relevant plans at the streets nearby (including the Hing Fat Street, Gordon Road, Whitfield Road and Electric Road) during the consultation period of the development project to consult and inform the local residents; if they have, of the exact locations where the notices and the plans are posted; if not, the reasons for that?
Reply:
Madam President,
The development referred to by the Honorable Member is related to a planning application submitted to the Town Planning Board (TPB) by a private developer and two art groups under section 16 of the Town Planning Ordinance (the Ordinance) on April 4 this year. The applicants plan to undertake a development project, which includes a hotel, place of recreation, sports and culture (arts venue) and exhibition and conference hall, at the Ex-A-King Slipway Site and the adjoining government land in Causeway Bay . The application is being processed by the TPB Secretariat, including consulting the government departments concerned and the public on the application based on the information provided therein. The TPB may later ask the applicants to submit additional data or further information.
The applicants have submitted, in support of the application, several technical assessment reports including those on environmental assessment, traffic impact assessment, visual impact assessment and tree survey. The government departments concerned will give professional advice on the development project and their technical assessments. They will also advise on the height and visual impacts of the proposed development having regard to the Urban Design Guidelines of the Hong Kong Planning Standards and Guidelines. Copies of the application and the related technical assessment reports are available at the Planning Enquiry Counter of the Planning Department for public inspection.
On April 13, a newspaper notice of the planning application was published, as arranged by the TPB Secretariat under the Ordinance. Three site notices were also posted at different locations on the application site, namely (1) the Ex-A-King Slipway Site facing the Victoria Park Road , (2) the Ex-A-King Slipway Site near the Causeway Bay Fire Station, and (3) the Whitfield Road Rest Garden facing Hing Fat Street .
The TPB Secretariat also mounted a notice of the application at two locations closest to the application site as designated by the Lands Department (i.e. on the roadside railings off St. Paul 's Convent School , Leighton Road and Jardine Engineering House, King's Road). Taking into account the views of the Eastern District Council, the Lands Department subsequently made available an additional position nearer to the application site (i.e. the roadside railing at the Causeway Bay Market, Electric Road ) for mounting the notice.
A notice of the planning application was uploaded onto the TPB's website and sent to the relevant District Office for posting at its public enquiry service centre. Copies of the notice were sent to the Owners' Corporations or other committees of buildings within 100 feet (around 30 metres) of the application site.
Any person may submit their views on the planning application to the TPB Secretariat between April 13 and May 4 in accordance with the Ordinance. The views so collected, together with the planning application and the comments from the government departments concerned, will be submitted to the TPB for consideration.
