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What next for New Central Harbourfront Site 3?

Hong Kong Blog Central Site 3 1536x1040

On 26 June, the Government announced that the New Central Harbourfront Commercial Site 3 will be included in the Land Sale Programme of July to September 2020. Having considered the prime location of Site 3 and its design requirements, a “two-envelope” approach will be adopted by the Government for tendering both the design and price submissions. Before the official process begins, we take an introductory look at the design and planning principles underpinning the requirements for Site 3.

The requirements

The Conditions of Sale for Site 3 have not been published. However, having studied the Planning Brief, the Approved Central District (Extension) Outline Zoning Plan and the presentation to the Harbourfront Commission in May 2020, the requirements are summarised below:

Zoning
  • Comprehensive development area
Proposed Use
  • Comprehensive development/redevelopment of the site for commercial development, mainly for office and retail use, and a continuous landscaped pedestrian deck, with the provision of public open space and other supporting facilities.
Site Area
  • 47,967m2 (subject to survey)
Commercial GFA
  • 150,000m2 (i.e. plot ratio of around 3.1).
Non-commercial GFA
  • 21,200m2 (i.e. Public Parking/Transport and GIC Facilities)
Height Restriction
  • 50mPD on western portion; and 16mPD on eastern portion.

 
1. Longer tender process: two-envelope tendering arrangement

Having considered the special design requirements of Site 3’s prime location, the Government will adopt a two-envelope approach in tendering. Submitted bids will be evaluated based on design merits and premium offers, with bids being weighed 50-50 for design and price. The proposal with the highest combined score will be awarded the tender with the Tender Assessment Panel comprising of Government officers which will be set up to assess the tenders with the support of technical advisers from the related professional fields. The marking scheme of the design portion is categorised into three groups:

  1. Good design of mandatory features
  2. Desirable design features
  3. Features beyond those in the Planning Brief

Accordingly, the tender process is expected to be longer than normal site tenders.

2. Long development process: 2 phases development

Site 3 will be developed in two phases, where Site 3A at the northern portion will be developed first to re-provide the existing General Post Office and the public car parking spaces. Upon completion of the necessary facilities for the re-provisioning of the existing public facilities, development of the remaining site at Site 3B will then proceed. Furthermore, the successful bidder will need to submit a Master Layout Plan, including an implementation programme with a phasing plan, for the Town Planning Board’s approval before starting the construction process. It is estimated that the whole development process might take up to six years, or more.

3. Restrictive building height: large portions of retail spaces

According to the Planning Brief and the Outline Zoning Plan, Site 3 has a restrictive maximum height limit of: 50mPD on the western portion and 16mPD on the eastern portion. The Planning Brief also suggested an overall stepped height profile descending from the hinterland side towards the harbourfront. Furthermore, Site 3 is divided into three portions by two existing public roads, Yiu Sing Street and Lung Wo Road. Under such site configuration, the higher-level spaces for office use (with harbour/open view) would be limited. It is expected that large portions of commercial GFA of Site 3 would be designed for retail use, which is different from the ex-murray road multi-storey car park site tendered in 2017.

4. Various design requirements

According to the Planning Brief, the Developer of Site 3 would need to follow various design requirements, of which details are set out below.

Landscape Deck A continuous landscaped deck spanning above Lung Wo Road and Yiu Sing Street with minimum 6m-wide unobstructed pedestrian access connecting the CBD to the harbourfront should be provided along the north-south direction.
Public Open Space A minimum 25,000m2 of public open space (i.e. about half of the site area) should be provided, with not less than 12,000m2 be provided at-grade. Such public open space should be designed, constructed, managed and maintained by the Developer.
Reconstructed Star Ferry Clock Tower (SFCT) The old SFCT with original height at about 25mPD is to be reconstructed at its original location in the eastern portion of Site 3 with due respect to its original design.
Other Urban Design Considerations
  • Provision of sufficient separation between buildings to ensure good air ventilation and visual permeability.
  • Provision of a comprehensive multi-level, barrier-free and convenient pedestrian network within Site 3 linking with the surrounding areas.
  • Maximisation of the at-grade public spaces.
  • Adoption of an integrated site planning approach and innovative architectural design for enhancement of the visual quality for the harbourfront with due consideration to the setting and design of the City Hall Complex.
  • Promotion of high permeability podium design.

 
5. Observations of Site 3

According to the latest market estimations, the Accommodation Value of Site 3 is in the range of HK$250,000m² to HK$400,000m². It would mean a total lump-sum premium of some HK$40 billion to HK$60 billion. The purchase of Site 3 would be challenging for Developers and requires the following considerations:

  • The Planning Brief outlines a range of requirements which makes the design element of this project complex
  • The Developer, or winning bid will have to provide a large lump-sum payment
  • Two-envelope system which requires a lot of professional input for the design proposal
  • Long development process with two phases including approval of MLP
  • Separated site configuration into three portions
  • Restrictive building heights
  • Changing market environment - outbreak of COVID-19, US-China trade tension and social issues in HK

It is expected that only large-scale Developers would be able to bid Site 3 in considering the substantial design/professional input and the financial ability for the large lump-sum premium. Nevertheless, the Developers holding existing surrounding commercial sites nearby would have higher incentive for bidding this strategic plot of land. Apart from the design requirements, special attention should also be drawn to the “restriction on alienation” clause in the coming Conditions of Sale, which would affect the tenderers’ financial arrangement in developing the large-scale site. We look forward to the development of Site 3, which would be a significant land sale and a future landmark in Hong Kong and could improve the enjoyment of Central Harbourfront for the general public.


Related Experts

Hannah Jeong

Head of Valuation & Advisory Services

Valuation & Advisory Services

Hong Kong

Hannah Jeong has extensive valuation & advisory services experience over 15 years including property investment and development projects specialising in valuation, development consultancy, financial analysis and feasibility studies. Project’s geographic coverage span across Asia Pacific and Middle East, in particular Hong Kong, China and Korea. She has started her career with Colliers since 2006 and is now heading our Valuation and Advisory Services - Hong Kong Office with over 40 professionals.

Hannah has strong client coverage on major financial institutions including global real estate funds and private equity firms.

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CK Lau

Managing Director | Asia

Valuation & Advisory Services

Hong Kong

CK Lau is the Managing Director of Colliers International responsible for valuation and advisory services in the Asian region.  He has over 30 years’ property experience in valuation, real estate consultancy and investment sales market in Hong Kong, the PRC and the Asian region. 

His expertise includes development consultancy; government lease modification application and premium negotiations; investment and development sites sales; litigation valuation advice and expert witness in the High Court/Lands Tribunal/arbitration; portfolio valuations; REIT property advice; rental determination; and valuation due diligence services.

He writes regularly on topics relating to land use and development in Hong Kong since 2010. His collection of over 200 articles in the Hong Kong Economic Journal and other publications can be viewed through the following link:

https://lauchunkong.wordpress.com

CK also participated as a member in the following publications:

• “The HKIS Valuation Standards 2017 & 2020”

• “HKIS Guidance Notes on Valuation of Development Land” published in 2016

• “Surveyors acting as experts in commercial rent determinations” Joint guidance note Hong Kong prepared by the HKIS and RICS Hong Kong” 1st edition 2015

 

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