The Ministry of Tourism, along with industry-leading travel agencies and business partners, will attend the International Travel Expo in Hong Kong on June 15-18 to promote tourism destinations across the archipelago. (Reuters Photo/Bobby Yip)

'Bit Anti-Climactic' as Fewer Firms Than Expected Bid for Central Hong Kong Site


MAY 13, 2017

Hong Kong. The number of firms bidding for a highly anticipated grade-A office site at the heart of Hong Kong's central business district fell below expectations on Friday (12/05), though experts say it could still be snapped up at a record-breaking price.

The rare site at Murray Road, the only plot of commercial land tendered for sale in Central in two decades, is widely seen as a prime location for a company headquarters due to its location and gross floor area of more than 460,000 square feet.

A poll of six analysts and surveys put the estimates between HK$14 billion ($1.8 billion) and HK$22.3 billion ($2.86 billion).

The results could be announced as early as Monday.

The market had expected up to 20 local and mainland Chinese firms to submit tenders, but a Lands Department spokesman told Reuters the government only received nine tenders before the deadline passed on Friday.

"It's a bit anti-climactic," said Denis Ma, head of research at JLL's Hong Kong office. "The lump sum ultimately is probably a bit of a sticking point (for mainland Chinese companies), especially if financing is a problem."

China's strengthening of capital controls late last year, restricting funds flowing out of the country as the yuan plummeted, could be a factor behind the dampened enthusiasm, analysts said.

"I'm not 100 percent sure about the financial arrangement of each mainland Chinese developer, but given the tighter capital controls from the Chinese government, this is probably one of the reasons behind we are seeing less participants for this site," said Marcos Chan, head of research for Hong Kong, Southern China and Taiwan at property consultancy CBRE.

Mainland Chinese companies piled into Hong Kong property in 2015-2016, outbidding some of the territory's most powerful developers to gobble up 29 percent of land sold for development in one of the world's most expensive real estate markets, according to industry figures.

Recent high-profile bidding successes by mainland Chinese firms, including the record-breaking purchase of a residential site at HK$16.9 billion ($2.18 billion) by two mainland Chinese developers in February, ramped up expectations that a sizable number of mainland developers and companies could be aggressively bidding for the Murray Road site.

Hong Kong was the second most popular destination for mainland Chinese real estate investment in 2016, and it will likely usurp New York City at the top in 2017, according to an April report by real estate services company Colliers International.