Mid-tier property developer K Wah International has expanded its footprint to Tseung Kwan O, with the surprise win of a residential site for HK$1.169 billion.
"The market expected existing landlords in Tseung Kwan O such as Wheelock, Sun Hung Kai Properties and Cheung Kong to win this site, while K Wah had no projects in the area before," said Alfred Lau, property analyst at Bocom International, the investment banking unit of the Bank of Communications.
K Wah outbid six other bidders, including Sino Land, New World Development and Paliburg Holdings, to win the 54,099 square foot government site in Area 66D1, located near the Tseung Kwan O train station and Evangel College.
The price, equating to about HK$3,929 per sq ft, is within market estimates of between HK$1 billion and HK$1.22 billion.
It is similar to the selling price of HK$4,009 per sq ft for a neighbouring site that was sold to Sun Hung Kai Properties in May. K Wah also bid for that site.
Although K Wah has been actively bidding for sites in the last few years, the last time the developer bought a site was in December 2009. That plot of land is in Tai Po.
"It needs to replenish its land bank as it has sold a lot of flats at its projects Marinella, The Coronation, Providence Peak and Providence Bay, which were developed under joint ventures with developers including Sino Land," Lau said.
"It has a lot of cash on hand now, so it's keen to buy land sites," he said, adding that his firm forecast that flats to be built on the site would be sold for about HK$7,500 per sq ft.
Offering a total gross floor area of 297,550 sq ft, the site must be developed into at least 360 flats and at most 378 flats, according to terms of the tender, which means an average flat size of roughly 716 sq ft.
Quinly Wan Tsz-mei, deputy general manager at K Wah Real Estate, said the developer was attracted to the site because it included park and sea views and the district was welldeveloped.
Wan said there was demand for flats in Tseung Kwan O.
The Lands Department will put a neighbouring Tseung Kwan O site on the market for tender later this month. Lau estimated that site would be sold for HK$2.2 billion, or HK$4,500 per sq ft, since it was on the waterfront.
Shares in K Wah International closed at HK$2.83 yesterday, down about 0.35 per cent, before the winning bid was announced. The overall market was flat.paggie.leung@scmp.com
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