State-backed conglomerate Citic Pacific has managed to beat 24 other bidders for a luxury residential plot in Tai Hang, located just southeast of Causeway Bay. The Hong Kong-listed Chinese firm reportedly won the bid with an HK$3.2 billion ($410.8 million) offer for the plot of land.
Hong Kong's Land Department announced the winning bid on Wednesday. The plot of land was expected to sell between HK$1.7 billion and HK$5.41 billion, according to market experts. Citic Pacific's winning bid was in the middle of the range but was still considered to be low in terms of the values of the lots in the area.
The winning bid was seen by some analysts as further proof of the cautious outlook of developers in Hong Kong's luxury property market given the recent domestic unrest and the ongoing trade dispute between China and the United States.
Knight Frank executive director, Thomas Lam, points out that the conservative pricing of the plot of land is a direct result of the current market conditions. It has also been greatly exacerbated by fears of the impending vacancy tax that will be imposed on developers.
Citic Pacific won the bid for the plot of land in Tai Hang through its subsidiary Bright Vision International. It is the first property Citic Pacific has bid on and won since it acquired a resident site in Ma On Shan for HK$1.47 billion in 2015. The company has announced plans to invest an additional HK$2.3 billion to develop the land and put up a yet-to-be-announced structure.
Other developers that had also placed their bids on the plot of land include major Hong Kong developers such as Henderson Land Development, CK Asset Holdings, and Sun Hung Kai Properties. There were also major developers from the mainland that participated in the bidding, including KWG Group, Logan Property Holdings, and Kaisa Group Holdings.
Citic Pacific's bid for the plot of land roughly translates to around HK$24,836 per square foot. According to market experts, the plot of land could potentially yield around 130 flats depending on the type of structure that would be built. Units in the area typically go for HK$21,000 to HK$43,000 per square foot. Citic Pacific could sell its mid-sized flats for HK$50,000 per square foot.
Analysts have pointed out that Citic Pacific made a big gamble on the property, given the recent decline in sales of luxury flats across the city. Asking prices for luxury units in the area has remained to be at the lower end of the expected range, with some being sold at a loss this year. Property agencies have also stated that sales of luxury homes could fall by up to 20 percent in 2020, as the city struggles to recover after suffering from its worst recession in over a decade.
