A new residential land parcel has been put on tender with a land premium that is 13 to 32 percent below market estimates, the lowest since October 2014, the Hong Kong Economic Journal reported on Friday.
Phase 10 of LOHAS Park, which will be built on top of the MTR terminal at LOHAS Park in Tseung Kwan O, received 24 proposals after the tender closed on Tuesday.
The project occupies 85,800 square feet with allowable gross floor area of 812,000 square feet. It is expected to provide 1,170 home units upon completion.
The profit sharing ratio has been fixed at 20 percent and developers are allowed to set the minimum investment, which will include the land premium of HK$1.66 billion to be paid to the government.
The terms indicate that MTR Corp. Ltd. (00066.HK) is willing to take up more risk, said Colliers International Asia Valuation and Advisory Services Vincent Cheung.
The premium translates into HK$2,044 per square foot, much lower than market estimates of HK$2,350 to HK$3,000.
Phase 5 of LOHAS Park, which was tendered in October 2014, had a premium of HK$1,874 psf, and phase 6 of LOHAS Park was set at HK$2,545 psf in November last year.
Cheung attributed the disparity in land premiums to the current downtrend in the property market.
The low premium may help attract more small and medium-sized developers to participate in bidding, he added.
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