Land in Hong Kong’s Repulse Bay area has attracted a record price for a residential site sold at government auction, with local developer SEA Holdings beating eight competing bids with a HK$1.19 billion bid ($152.3 million).
The Hong Kong-listed developer now holds the rights to develop up to 19,055 square feet (1,770 square meters) of luxury housing on the site near Repulse Bay beach in one of the side’s most exclusive neighborhoods south of Hong Kong Island, with the winning bid equating to just over HK$62,355 per square foot of housing, The Hong Kong Land Department announced on Tuesday.
“Located in one of the most prestigious locations in Hong Kong, the supply of this type of site is very limited and the record of transactions in the region has already shown that buyers are ready to pay exorbitant prices for houses luxury in Repulse Bay,” said Martin Wong, Greater China Head of Research and Consulting at Knight Frank.
The record tender comes after a recent report by Knight Frank predicted that prices for luxury homes in Hong Kong would rise by up to 5% this year, a house in the Mount Nicholson project of Wheelock and Nan Fung s ‘ being sold for HK$137,872 per square foot last month, and developers have ramped up purchases of sites in upscale neighborhoods.
More expensive than the top
Analysts attributed the price paid for the site, Rural Building Lot No 1203, both to its location in an area favored by billionaires and movie stars, and to the limited scale of the project, which brought it within the budgets of a wider range of potentials. bidders. The Hong Kong government had launched the tender for the site in December with bids expected last week.
“The Repulse Bay area is a famous luxury area,” said Alex Leung, senior manager of local surveying firm CHFT Advisory and Appraisal Limited. “The site in question is unique as it is only about a two minute walk from the beach at Repulse Bay, a landmark in Hong Kong.” Leung added that nearby amenities such as the luxury Pulse shopping center add to the land’s appeal.
Vincent Cheung, managing director of real estate consultancy Vincorn Group, estimated that given its limited size and tight plot ratio for the 21,173 square foot site, the project could produce as little as four or possibly be five fully detached houses, and said he expects the sale price of the villas upon completion would be HK$100,000 to HK$110,000 per square foot.
SEA Holdings’ purchase of the site on South Bay Road exceeds the previous record price per square foot of space paid in a government land sale that was secured when Wharf Holdings in December 2020 agreed to pay the equivalent of HK$46,300 per square foot for a site along Mansfield Road on Victoria Peak.
To win the Repulse Bay site, the mid-sized developer beat bids from publicly listed heavyweights including Sun Hung Kai Properties, CK Asset Holdings, Sino Land, Hang Lung Properties, K Wah International and Great Eagle Holdings. Motherboard-listed Emperor International Holdings and privately held K&K Property Holdings also joined the contest.
South side experience
“The overall return on investment in luxury homes in Hong Kong is relatively low, the return may be as low as 1% to 1.2%, but we still expect strong capital appreciation from this type of development, especially after the borders between HK and mainland China reopened,” added Vincorn’s Cheung. He also noted that SEA Holdings had expressed interest in developing the project for investment purposes and renting out the finished homes.
Led by tycoon Lu Wing Chi and his CEO-son Lambert Lu, SEA Holdings already has some experience valuing high-end locations on the south side of Hong Kong Island. More than two decades ago, the company developed 1 Shouson Hill Road East, a villa project on Shouson Hill, where a house traded last July for more than HK$91,000 per square foot and an adjoining unit in the same project sold for HK$79,036 per square foot. during the same month.
The company also owns the Crowne Plaza Hong Kong hotel in Causeway Bay and the Winway Building on Wellington Street in Central. Overseas, SEA Holdings owns 20 Moorgate and 33 Old Broad Street, both of which are office buildings in the City of London.
As overall luxury home sales slumped in the fourth quarter of last year, according to agency data, a home in Mount Nicholson set a new price record in November when it sold for 140 HK$800 per square foot, buyer being an heiress. from mainland China.
Hope for a return of mainland luxury buyers has also been tied to recent purchases of luxury locations on Hong Kong Island, including Lai Sun’s acquisition of a Mid-Levels project for 1 HK$.3 billion in January and Nan Fung’s purchase of a set of houses in Jardine’s Lookout. that same month for HK$1 billion.