Evergrande’s bid to sell Yuen Long plot, included in Hong Kong’s proposed Northern Metropolis, draws little interest
- Evergrande has invested US$1.1 billion on the 2.2 million sq ft plot in the New Territories, which sits within the proposed Northern Metropolis
- Evergrande, shouldering more than US$300 billion of liabilities, was reportedly willing to sell it for a US$115.6 million loss
The embattled mainland developer, desperate to trim over US$300 billion of liabilities, has been looking for a buyer for a 2.2 million sq ft plot in Yuen Long on which it has invested a total of nearly HK$8.9 billion (US$1.1 billion), the Sing Tao Daily reported in August. Evergrande bought the farmland, located near the Mai Po Wetlands, from Henderson Land for HK$4.7 billion in 2019 and paid almost HK$4.2 billion this year to convert it to residential use.
Despite Evergrande’s offer to sell it for HK$8 billion, or a loss of HK$900 million, no buyer seems interested, according to market observers.
Evergrande did not respond to phone and email requests for comment by the South China Morning Post.
Tom Ko, Cushman & Wakefield’s executive director of capital markets in Hong Kong, said prospective buyers could be waiting for a bigger discount as Evergrande could get increasingly desperate to offload the asset as debt payment pressure mounts.
Evergrande had planned to build 268 villas on the plot, with a typical unit measuring 2,421 sq ft on average.
The proposed Northern Metropolis will also include a new cross-border railway linking the city to the Qianhai economic zone in Shenzhen, and an extension of a local rail link that will stimulate development across Hong Kong’s rural hinterland.
“The government will aggressively develop the northern New Territories in the future,” said Stewart Leung, chairman of Wheelock Properties, noting that this could potentially take eight to 10 years.
Leung, however, said that he was not approached by Evergrande for the parcel.
Leo Cheung, adjunct associate professor at the department of real estate and construction at University of Hong Kong, said the benefits to Evergrande’s parcel from the railways link remains to be seen as there is no detailed blueprint yet.
“That place is out in the middle of nowhere after all,” Cheung said.