Hot spot in a cold market
The Standard
Thursday, December 22, 2011
Hung Hom is bringing a rare feeling of warmth to a property market that has sent chills down the spines of agents. The optimism is emanating from the same area, around Fat Kwong Street, where three residential projects are sending pulses racing by coming on the market at almost the same time.
Making their sales pitches easier is the fact that more supply in the area is on the way, with top developers keen to stock up on sites that are becoming rare.
The previous major one to hit the headlines came in June last year, when Sun Hung Kai Properties (0016) splashed out HK$10.9 billion - a record for Kowloon - for a prime 173,800-square-foot plot on the same street.
The site is 300 meters down the road from Chatham Gate, currently the largest project on the market in the area, with its initial price list published last Wednesday.
Its first 51 flats, mostly facing south - the preferred orientation for Chinese - average HK$16,118 per square foot, among the most expensive in the district. The project's 334 flats range in size between 392 and 2,080 square feet.
Chatham Gate's joint developers - which include SHKP, Shun Tak Holdings (0242), New World Development (0017) and Liu Chong Hing Investment (0194) - have not taken an aggressive sales tack, yet some transactions and reservations have already been recorded this week.
The second is The Met.Focus from Wang On Group (1222), which has sold 30 of its 103 homes. The flats, smaller ones of between 294 and 467 sq ft, are averaging more than HK$9,000 psf.
Its next-door neighbor, Star Ruby, is the last of the three projects to be put on the market. Its developer, Far East Consortium (0035), is expected to make the first batch of 30 flats available at an average of HK$9,188 psf as soon as tomorrow.
Why has Hung Hom become so attractive?
Centaline Property senior director Rocky Wong Chun-wai puts it down to the old real-estate mantra - location, location, location.
"Being in an urban area is one of the best selling points, for new residential projects like these are becoming rarer and rarer," he said.
Another top selling point is auspicious infrastructural projects that are set to bind the area to the rest of the city. The district, once infamous for bumper- to-bumper traffic waiting to get in and out of the Cross-Harbour Tunnel - is getting on the MTR system map.
That is in the form of Ho Man Tin station, which takes shape as part of the Kwun Tong Line extension.
Due to open in 2015, the station will be just minutes away from all three developments.
Looking to make the most of the MTR selling point, other developers certainly have not overlooked the opportunities nearby.
In April, Nan Fung and Wing Tai Asia (0369) bought at a land auction a site on Ko Shan Road, across the street from Chatham Gate, for HK$1.5 billion.
In June, Cheung Kong (Holdings) (0001) snapped up a tiny site on Gillies Road South for HK$7,640 psf, beating out 10 other bidders. Government officials were reportedly "stunned" by the strong interest in a site that carries restrictions on flat sizes.
Centaline's Wong said the projects under way on Fat Kwong Street, Ko Shan Road and Gillies Road South will come on the market in 2013 or 2014.
The MTR extension will also connect to harborside Whampoa Garden, the ship dock-turnedlarge housing estate built by Cheung Kong in the 1980s. Since the development, the Hung Hom Bay area has been a stronghold of tycoon Li Ka-shing's corporate empire. But in August, Wheelock & Co (0020) surprised the market by acquiring a commercial site in the heart of Hung Hom Bay for HK$4 billion.
Analysts say that as the MTR will soon link Hung Hom to East Kowloon - a district highlighted in Chief Executive Donald Tsang Yam-kuen's policy address in October - major developers are rushing to secure the last pieces of brownfield sites in the district. The government plans to develop East Kowloon, including the new Kai Tak Development Area, Kwun Tong and Kowloon Bay, into another business district.
Some believe that while this will not hurt Central's status as Hong Kong's commercial center, Tsim Sha Tsui's office market - in which Wheelock has a strong presence through subsidiary Wharf Holdings (0004) - will take the worst hit. This may explain why Wheelock is rushing to diversify.
Before the Hung Hom deal, the company, controlled by Peter Woo Kwong-ching, purchased a commercial site on Wai Yip Street in Kwun Tong for HK$3.5 billion in July. It will cost Wheelock more than HK$12 billion to develop its two commercial sites, analysts estimate.
Last week, a hotel plot near Wheelock's Hung Hom site attracted four bidders, including SHKP, Cheung Kong and Sino Land (0083).
Market experts believe that the eventual successful tender price will add another chapter to Hung Hom's residential renaissance.