In the 2022-23 Budget delivered on 23 February 2022 by financial Secretary Paul Chan, he mentioned that Hong Kong’s overall exports had grown by 19% YoY, with the overall economy increasing by 6.4% vs the global average of 5.9%. On the same day, the Government announced the withdrawal of a mega-site tendered to be a mixed-port logistics hub. Instead, it would be used for a COVID-19 hospital.
The site in Tsing Yi was not part of this quarter's Land Sales Programme, but the Government announced it was available on 17 December 2021 and earmarked for logistics services.
Lot 200’s details:
|Property||Junction of Tsing Yi Road and Tsing Yi Hong Wan Road, Tsing Yi, New Territories|
|Lot Number||Tsing Yi Town Lot No. 200|
|Zoning||Other Specified Uses (Container Related)|
|User||Logistics and freight forwarding|
|Site Area||Approximately 675,226 sq. ft. (62,730 sq. m.)|
|Maximum Gross Floor Area (GFA)||Approximately 2,219,214 sq. ft. (206,170 sq. m.) (As per the Conditions of Sale)|
|Maximum Plot Ratio||3.29 (As per the Conditions of Sale)|
|General Market Expectation||Estimated at HK$6,5 billion to HK$8,9 billion (Accommodation Value: HK$2,900/sq. ft. to HK$4,000/sq. ft.)|
|Tender Closing Date and Time||Noon on 11 March 2022|
This mega-site is located at the junction of Tsing Yi and Tsing Yi Hong Wan roads and is surrounded by logistics buildings, including Mapletree Tsing Yi Logistics Centre and China Merchants Logistics Centre. Tsing Yi has eight bridges linking it to Kowloon, the New Territories, Park Island, and Lantau, ideal for logistics developments. Lot 200 is conveniently located next to Kwai Tsing Container Terminal 9.
The site was zoned as “Other Specified Uses (Container Related Uses)” under the Draft Tsing Yi Outline Zoning Plan No. S/TY/31 gazetted on 2 July 2021. This zone is intended primarily to cater to container-related uses and port backup facilities. Port related development such as a container freight station, logistics centre, container vehicle parking and a container storage-and-repair yard are also permitted within this zone.
According to Conditions of Sale, the site was designated for logistics and freight forwarding uses, with a unique condition of providing space to accommodate at least 2,200 20-foot containers within the lot. It has a height restriction of 95 metres above Hong Kong Principal Datum, and the purchaser may not assign, mortgage, charge, part with possession of, or otherwise dispose of the lot except as a whole.
The pandemic has placed immense pressure on the office and retail market, which is not likely to ease before the end of this year. However, there is increasing demand for logistics services as online shopping has become a new norm. Logistics developments have become a highly sought-after asset.
The Government rarely sells logistics sites, offering only three since 2011. The last sold was Siu Lang Shui Road, Area 49, Tuen Mun, New Territories. It was awarded to Goodman in May 2018 for over HK$2,75 billion (Accommodation Value: HK$3,228/sq. ft.). Mapletree Tsing Yi Logistics Centre was bought by Mapletree in May 2013 for over HK$1,69 billion (AV: HK$1,850/sq. ft.). Lot No.200 is more than twice the size of either of these lots, setting it up to become the most expensive logistics site sold via government tender.
By referencing logistics developments nearby, we believe the lot was expected to attract rents upwards of HK$15 per sq. ft. based on Gross Lettable Area. The general market expectation on the site’s tender was approximately HK$6,5 billion to HK$8,9 billion (AV: HK$2,900/sq. ft. to HK$4,000/sq. ft.)
But Lot No. 200 must be carefully valued. Premium logistics buildings need ramp access, which will reduce the actual warehousing floor areas. The special requirement to accommodate 2,200 containers and a more extended lease-absorption period is expected for such a mega facility, so its land value would not be as high as recently sold smaller industrial land prices.
Although this tender has been cancelled, we understand that many market players were preparing to bid on it. This last-minute cancellation could cost them some of their initial investment. Hopefully, the pandemic facility will not be there long, and the site can soon be tendered.