Minmetals land pays $515mn for Hong Kong Kowloon site

Bloomberg

Minmetals Land Ltd., a Chinese developer, outbid Hong Kong giants Sun Hung Kai Properties Ltd. and Sino Land Co. with an HK$4 billion ($515 million) offer for land in the territory’s Kowloon district.
The price works out to about HK$7,058 per square foot of saleable area, according to calculations by Bloomberg News based on figures released by the Hong Kong Lands Department. That is almost twice the valuations some industry experts had placed on the site, which is located in the industrial area of Yau Tong. The win by Minmetals illustrates how smaller developers from China are willing to bid aggressively against established players to get a toehold in the Hong Kong housing market, in spite of a slump in local property prices.
“More and more mainland Chinese companies will come to invest in the Hong Kong market apart from the sophisticated ones like China Vanke, who have been here a long time,” said Victor Lai, chief executive officer for valuation at Centaline Property, who had expected the site to fetch between HK$5,000 and HK$6,000 per square foot.
While larger mainland companies including China Overseas Land & Investment Ltd. and Poly Property Group Co. had built up land banks through government tenders since 2014 through to the beginning of this year, they retreated during the second quarter and are now being outbid by smaller developers.
“The Chinese companies started the year with a bang, then quietened down, now they are back again,” said Denis Ma, head of Hong Kong research at Jones Lang LaSalle Inc., who described the price paid by Minmetals as “pretty expensive” on a per-square-foot basis compared with the selling price of homes nearby.

SHARES CLIMB
Shares of Minmetals jumped as much as 4.3 percent, the most since June 29, and were up 2.2pc at 95 Hong Kong cents at 2:08 pm in Hong Kong. The Hang Seng Property Index rose 0.4 percent. Before the auction results, Thomas Lam, head of valuation and consultancy in Hong Kong at Knight Frank LLP, had estimated the site would sell for between HK$3,500 to $HK3,800 per square foot.
The Yau Tong site is adjacent to a cement factory, with harbor views, and was sold with a requirement that the development include a public car park. Thirteen companies including Wheelock Properties Ltd., Cheung Kong Property Holdings Ltd. and Far East Consortium International Ltd. and Vanke submitted tender bids for the property, according to the Lands Department.