Hong Kong’s government can turn its ‘rotten luck’ on Kai Tak land sales into a windfall for building homes, analysts say
- Commercial sites that failed to sell since January 2019 can generate 4,000 new homes if converted into residential use, Centaline Surveyors says
- Residential plots in Kai Tak can fetch twice as much as commercial plots, a potential boost to city’s stretched budget
“Selling land needs right timing and the government has had rotten luck in finding buyers for commercial sites in a poor economic climate,” said Leo Cheung, corporate development director of valuations and property management at Prudent Holdings. “The land conversion idea can help support its land-supply targets.”
The government would consider converting the Kai Tak commercial sites for residential purposes, Chan said at a public event, without specifying any particular plot. The Civil Engineering and Development Department is conducting a technical feasibility, he added, without elaborating.
The three failed tenders have cost the government at least HK$21.2 billion in missed revenues based on estimates by three property surveyors. Covering a total area of 430,100 square feet (39,957 square metres), they can potentially add 4,000 new homes to the existing housing stock.
“The proposed change to residential will certainly receive general support from Hongkongers, given that the government has struggled to ease housing shortage,” said Victor Lai Kin-fai, managing director of Centaline Surveyors.
The last flight out of Kai Tak airport took place in 1998, a year after the handover to China, with the operations relocated to the reclaimed site on Chek Lap Kok island.
In a 2011-12 policy address, the government unveiled its vision of turning an area comprising Kai Tak, Kowloon Bay and Kwun Tong into the city's second core business district, to complement the bustling Central district and ease rocketing property prices.
The plan development for Kai Tak covers 328 hectares of land to accommodate 134,000 residents in 49,900 housing units. Five per cent of the site allocated for commercial use, 13 per cent for residential and as much as 30 per cent for open space.
Much still needs to be done after almost a decade.
The cumulative shortfall in public housing, totalling 23,300 units since 2013, is equivalent to about two Taikoo Shing Estates on Hong Kong Island, according to report published by local think tank Our Hong Kong Foundation in April.
Kai Tak’s residential land soars to record HK$25.1 billion price tag as Sun Hung Kai wins tender
Property developers have been reluctant to place big bets given the large investment outlay and long gestation period, said Thomas Lam, head of valuations and advisory at Knight Frank. Converting them into residential use is “a better option” and could generate a windfall to the city’s coffers, he added.
Residential plots in Kai Tak can fetch up to HK$11,000 per sq ft, almost double their valuation as commercial sites, Lam estimated.
“The [Kai Tak] site cannot wait any more,” said Thomas Lam, head of valuations and advisory at Knight Frank. “The Sports Park nearby is going to launch very soon. It makes no sense to let such a big site nearby sit empty when the park makes its grand debut.”
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