Occasionally we hear of ‘crazy’ transactions for some small-sized but prime land plots nearby KLCC. Well, how high can land prices be, for these small pieces of land nearby KLCC, say within the next 20 years? I have no answer. However, I would like to share a piece of interesting news which can perhaps predict the future. One old 5-storey car park building has been sold for HK$23.3 Billion (RM12.94 Billion). Do read the full news in nasdaq.com here. The size of the land? 31,000 square feet. Yeah, less than 1 acre. By the way, even though we know Hong Kong land prices are expensive due to its size but this transaction has set record as the most expensive plot of land ever sold in Hong Kong. The winner is Henderson Land Development and it had to beat many mainland Chinese developers. The price per sq ft is HK$50,000. (RM27,700). Land prices nearby KLCC is definitely not going to reach this level within the next 20 years, I hope. 🙂
Actually, the two Hong Kong developers I know would be Cheung Kong Property Holdings and Sun Hung Kai Properties. Both of them lost in the bidding. This piece of land is in an office area and the vacancy rate is less than 2 percent. (YES, it means very few choices…) The actual site is in the middle of Cheung Kong Center and Hutchison House, two major flagship buildings owned by the city’s richest man Li Ka-shing. Henderson will be building a landmark office building with retail facilities and it is expected to be completed in 2022. The report said that this building would become the company headquarters for Henderson thanks to its location and gross floor area of more than 460,000 square feet. The availability of office space remains tight in the prestigious Central district and with more Chinese financial companies eager to set up offices there, prices would be pushed higher. Do read the full article in Nasdaq.com which has many more facts here.
I personally believe that the bid is not something out of the ordinary. To buy one whole building as a headquarter within the same area would definitely be costly, not to mention all the additional renovation costs. The design may not even be acceptable to the new owner. Building cost is also something more manageable as Henderson is also a developer themselves. In other words, the usual profit margin that Henderson would have to pay for a new building is now ‘saved.’ The location itself, as stated in the article is the one which is out of the ordinary. The next available piece of land may be years away. The decision is thus quite straight forward. Bid so high that every other bidder’s bid would be pretty far away. This is not the time to try and bid slightly higher and hopefully be the highest. 🙂 Perhaps I should drop by and look at that piece of land in my next trip to Hong Kong in mid June. Haha. Happy following.
written on 19 May 2017
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