According to the findings of an analysis, changes in interest rate trends and increases in construction time have contributed to a decrease in the values of residential land in Kai Tak.
Residential land at Sites 2 and 3 in Kai Tak Area 2A was purchased by a consortium for a total price of NT$5.35 billion. The consortium was comprised of Sino Land, China Overseas, Great Eagle, and China Real Estate. The land price per square foot was around NT$5,392, which established a new high for the same region of being more than NT$5,392 per square foot. A new low not seen in 9 and a half years, which is in line with what the market had anticipated.
Zhang Qiaochu, managing director of Hongliang Consulting and Appraisal, thinks that the project will take some time to build many social welfare facilities; developers are concerned about interest rate trends; and some new projects have recently been launched at low prices, which has led to a decline in land prices in Kai Tak. All of these factors have contributed to the decline in the value of land in Kai Tak. The proposal that the developer submitted was reasonable and practical, and the level of risk was easily manageable. In his explanation, he said that "advance can be used to attack, and retreat can be used to defend."
Sino Land-led consortium wins Kai Tak land tender at conservative price https://t.co/tYNbXXcc7f
— Dimsumdaily Hong Kong (@dimsumdaily_hk) September 13, 2023
Zhang Qiaochu is certain that even if the real estate market does not improve over the course of the next several years, developers will still be able to earn decent profits when the project is finished and sold at a price of 17,000 to 18,000 yuan per square foot of salable space. This is according to Zhang's belief. In addition to this, he noted that developers will still be interested in purchasing urban land.
He also mentioned that he expects land prices in Kai Tak will fall even more in the event that interest rates continue to climb and overall property prices fall again. This was another one of his points.