A commercial site on the runway of Hong Kong's former airport that was abandoned because of "social contradiction and economic instability" on June 11, following a successful record bid of HK$11.1 billion (US$1.4 billion), is back on the market - but may be worth 40 per cent less.
The Lands Department said on Friday that five bids had been received for the plot, Area 4C Site 4, on the Kai Tak runway. The plot has a gross floor area of 863,000 sq ft and received six bids in May, before the start in June of the anti-extradition bill and anti-government protests that have rocked the city since.
Hong Kong-based Goldin Financial Holdings, which abandoned the site and forfeited its HK$25 million deposit less than a month after winning the bid, won the site for HK$11.1 billion, or HK$12,888 per square foot, on May 15.
And now, the site is expected to fetch HK$8,000 per square foot, a discount of 40 per cent, according to Vincent Cheung, managing director of Vincorn Consulting and Appraisal.
"The plot will yield a hotel and retail shops, which have been under much pressure recently. The lacklustre reaction is not much of a surprise, and it is possible to see it being scraped if developers' offers don't meet the government's expectations," he said.
Hong Kong's worst political crisis in decades has pushed analysts to cut valuations amid a dormant market. Alvin Lam, director at Midland Surveyors, said he expected the plot to fetch HK$10,000 per square foot, a drop of 22 per cent.
"Investors are more cautious of late, and most are taking a wait-and-see approach," he said.
CK Asset Holdings, Chinese Estates Holdings, Great Eagle Holdings, Sun Hung Kai Properties and Sino Land are the companies in the running for the plot.
Goldin was not among the bidders. Its chairman, billionaire Pan Sudong, said in June that he did not believe the protests would affect the growth of Hong Kong's commercial property market in the long-run. "I will submit a personal bid if the government offers the commercial site for tender in future," he had said at the time.
Area 4C Site 4, located near Hong Kong's cruise terminal, offers full views of Victoria Harbour. At least 30 per cent - and no more than half - of its gross floor area will have to be reserved for a hotel with between 480 and 800 rooms. The remaining area will be zoned for commercial purposes, such as offices and retail.
Kai Tak, left vacant after the city's airport shifted to Chek Lap Kok in 1998, will be redeveloped into Hong Kong's second main business district.
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