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Land Sales Programme | November Update

Hong Kong blog CIVAS Land Sale 2211 1536x1040

Despite Lot No. 1077 in Survey District No. 3 being split, the Anderson Road Quarry area has significant demand for retail

 
The second half of the 2022-23 Government’s Land Sale Programme comprises three commercial sites, one of which is rolled over from the 2021-22 Programme. The first commercial land sale within the Anderson Road Quarry area (ARQ) was awarded to Link REIT in August this year. Tenders invited for the second commercial site in October will close at noon tomorrow (18 November 2022).

Given the imminent tender deadline, this month’s Land Sale Blog provides a detailed site analysis.

Off Anderson Road, Kwun Tong, Kowloon (Lot No. 1077 in Survey District No. 3)

Property Off Anderson Road, Kwun Tong, Kowloon
Lot Number Lot No. 1077 in Survey District No. 3
Zoning
  • Edged Red Area: Commercial (1)
  • Edged Blue Area: Commercial (2)
Site Area Approx. 57,372 sq. ft. (5,330 sq. m.)
  • Edged Red Area: 47,685 sq. ft.
  • Edged Blue Area: 9,688 sq. ft.
Maximum Height Restriction (Under OZP) 205 mPD
Mean site formation level
  • Edged Red Area: 186.8 mPD
  • Edged Blue Area: 190.8 mPD
General Market Expectation HKD331,000,000 to HKD607,000,000
(AV: HKD3,000/sq. ft. to HKD5,500/sq. ft.)
Tender Closes Noon on 18 November 2022

Source: (Lands Department, Colliers)

   
The Edged Red Area abuts On Kin Road, and the Edged Blue Area borders On Hei Street. Both roads are yet to be completed. The site is situated north of On Tat Estate and is within a 12-minute drive from Kwun Tong MTR station. It is close to several neighbourhood malls – On Tat Shopping Centre, Sau Mau Ping Shopping Centre and Po Tat Shopping Centre.

Under the Approved Kwun Tong (North) Outline Zoning Plan No. S/K14N/15 gazetted on 15 January 2016. The zone is intended primarily for commercial developments. These may include uses such as shops, services, places of entertainment and eating places, functioning as regional or district commercial or shopping centres. According to the Conditions of Sale, the purchaser must complete the development on or before 30 September 2027.

According to the Information Statement in the Conditions of Sale, On Kin Road, On Yu Road and On Hei Street are tentatively scheduled to be substantially constructed around the first quarter of 2023. The roads will significantly improve connectivity for the Subject and the neighbourhood. Other pedestrian links, such as footbridges and escalators, will strengthen the ARQ neighbourhood’s connectivity to Kwun Tong City Centre.

Growing demand for local retail

The subject site will likely provide retail space to meet the growing demand from the surrounding public housing estates, due to complete in phases from 2024. Previously, the government sold two residential sites in the area. In 2018, Chinachem Group acquired Lot No. 1068 in SD3 at a consideration of HKD3.11 billion (accommodation value: HKD12,003/sq. ft.) for private residential development, which is now known as Mount Anderson, due to provide 334 flats by 2023. In 2020, CK Asset Holdings Limited acquired Lot No. 1069 in SD3 at a consideration of HKD4.95 billion (accommodation value: HKD4,546/sq. ft.) to build 1,700 units of private and subsidised starter homes.

Existing stock in the area is scarce, and mainly in the nearby ageing neighbourhood malls owned by Link REIT and the Housing Authority. The only commercial land sale transaction in the area was in August 2022, when Link REIT won the tender of Lot No. 1078 in SD3 with a premium of HKD766 million (AV: HKD5,501/sq. ft.). Lot No. 1078 SD3 will deliver around 140,000 sq. ft. of retail space by 2028. The subject site’s unique configuration will affect its development potential compared to the neighbouring site transacted in August 2022.


"The site’s unique configuration will affect its development potential compared to the neighbouring site transacted in August 2022."


The Housing Department proposed using sites R2-4 and R2-5 for non-domestic facilities under “Shops and Services” and “Eating Places”, approved by the Town Planning Board in 2021. These sites could deliver around 145,000 sq. ft. of non-domestic area. However, with a catchment population of more than 30,000 upon completion of nearby residential projects, more retail space will be needed to serve residents’ daily needs.

It’s likely to attract interest from those seeking synergy with developments nearby

The Subject site is irregular in shape and separated into two parts by Site R2-7, a plot of government land currently earmarked for public housing. This would potentially limit synergy within the site. In addition, the Edged Blue Area’s development scale is hindered by its small size and stringent maximum GFA restrictions. Whilst it’s not uncommon to have a site divided into two, those with sections a considerable distance apart and abutting different streets are unusual. This would impact the site’s value, potentially resulting in a far lower accommodation value than Lot No.1078 in SD3.


"Whilst it’s not uncommon to have a site divided into two, those with sections a considerable distance apart and abutting different streets are unusual."


Given the bourgeoning retail need from the upcoming private and public residential developments and the lack of retail space in the area, the site is still likely to garner considerable interest. Potential buyers would include developers and investors with developments in the area seeking enhanced synergy between the site and their properties. Even with this site’s constraints, we expect developers and investors will be interested because it offers stable long-term investment in a rapidly developing non-core district.


(Source: Colliers)

 


Liked what you read? Check out these articles you may also be interested in:

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