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Aggressive developers may bid HK$1.54b for Kowloon Tong site

HONG KONG: The auction on Tuesday, Oct 12 of a luxury residential site in Kowloon Tong is expected to attract aggressive bidding from developers, and could fetch the government more than HK$1.54 billion (RM616.98 million), say analysts.

The site, located near One Beacon Hill at 3, 5 Ede Road, has an area of 30,225 sq ft. Surveyors estimate it could fetch from HK$1.4 billion to HK$1.54 billion, or between HK$15,440 per sq ft and HK$17,000 per sq ft, or about one-third higher than the minimum guaranteed bid of HK$1.053 billion, or HK$11,613 per sq ft, that triggered the auction.

Analysts say the site, two vacant blocks that formerly provided government staff accommodation, could be used for two 13-storey residential buildings with a total gross floor area of 90,676 sq ft. Midland Surveyors director Alvin Lam expects the project could provide about 40 flats of about 2,000 sq ft each.

In August, Kerry Properties acquired a neighbouring residential site at 1 Ede Road for HK$1.285 billion, or HK$16,587 per sq ft, and Kerry Properties has now indicated an interest in bidding tomorrow for the new site. Parcelled together, the two sites could be used to develop a larger luxury residential project with a total gross floor area of 168,145 sq ft, analysts said.

But Kerry Properties would have to pay a land premium to the government for lease modification if it jointly developed the two sites, said Charles Chan Chiu-kwok, managing director at Savills Valuation and Professional Services.

Despite the strong appetite developers have shown recently for luxury residential sites in prime locations, Chan expects that once the bids are in the accommodation value (or land price per sq ft of flats to be built) of 3, 5 Ede Road will be slightly lower than that of 1 Ede Road.

"The view of the new site may be partially blocked by the development at 1 Ede Road. Since no joint development may occur if the sites are sold to another developer, their price will likely be lower than a bid potentially on offer from Kerry," Chan said.

Developers will also have another chance in Kowloon Tong as a luxury residential site at Inverness Road is scheduled for sale on Nov 3.

Chan expects 3, 5 Ede Road could sell for around HK$1.4 billion, or HK$15,440 per sq ft, but Willy Liu, managing director at Ricacorp Properties, believes the land price of the new site will be HK$1.54 billion or HK$17,000 per sq ft — 2.5% more than that of 1 Ede Road. — South China Morning Post
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