Developers bag two land sites for HK$4.4bn

One site was awarded at HK$3.94bn.

Two land sites were rewarded to developers for HK$4.4bn.

A mixed-used site in Tsuen Wan was awarded to Billion Development at HK$3.94bn while a residential site in Ma On Shan was won by Wang On Group and Kam Wah for HK$428mn.

The Yeung Uk Road site in Tsuen Wan could offer 1,066,928sf of GFA (423,725sf residential and 643,203sf commercial).

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The HK$3.94bn land premium works out to an AV of HK$3,693psf, which is 13% below the low end of surveyors’ estimates of HK$4,250-5,700psf.

It is also 27% lower than the HK$5,081psf AV for the Tsuen Wan West Site 6 awarded to NWD/Vanke back in January 2013.

Market participants attributed the low land premium to the abundant supply to come in the area. According to the Hong Kong Economic Times, Billion Development plans to invest HK$10bn, which implies average cost of HK$8,521psf.

To achieve a 20% margin, the flats will have to be priced at more than HK$12,800psf, in-line with the secondary transaction price of HK$7,940-16,000psf in nearby estates.

As for the other site in Ma On Shan, the HK$428mn land premium is translated into an AV of HK$3,719psf, beating surveyors’ estimates of HK$3,300-3,693psf.