9 July 2014 - Hong Kong Economic Times reported that Sun Hung Kai Properties has won two residential plots in Tin Shui Wai for a total of approximately HK$4.2 billion. The average transaction price of HK$ 1,854 per square foot marks a 13-year record low for land prices within the district.

 

Victor Lui, Deputy Managing Director of Sun Hung Kai Properties said that the sites have a sizeable development area and they can make suitable plans based on many low rise residential developments in the area. Hong Kong's Wet Land Park is also nearby. Sun Hung Kai Properties plan to invest HK$16 billion -- cost of the plots included -- to build mainly small- and medium-sized flats on the sites.

 

However, he added that there are some strict requirements for EIA for the sites' planning. For instance, the sites’ tender winner group has to be responsible for constructing parking areas for the public and has to deal with cave problems located on the sites. It is expected that the construction costs will be much higher than other built developments in the district.

 

Including the construction costs and interest payments, Sun Hung Kai Properties is predicted to have to invest around HK$ 11.753 billion in the developments, which will amount to approximately HK$ 4,500 to 5,000 per square foot in spending. This may be the reason why the tender only attracted the participation of big names such as Henderson Land, Sun Hung Kai Properties, Far East and Sino Land. Cheung Kong Holdings, already a big landlord in Tin Shui Wai did not take part.

 

According to EPRC data, residential developments near the sites are relatively new, having been completed in the last 4 to 7 years. Their recent average second hand market prices range from HK$ 5,880 to 8,215 per square foot. Assuming that the profit margin and the utility rates of the two transacted sites are 20% and 80% respectively, their selling prices will reach HK$ 9,659 per square foot when they are launched. That means the prices are predicted to be 10% to 64% higher than the second hand market.