Bidding for a luxury site to be auctioned in the Kowloon Tong area in Hong Kong will happen under the shadow of new rules that limit the amount of common space that may be added into a development to 10 percent of its permitted gross floor area (GFA).
The site located in Inverness Road, on the edge of Kowloon Tong close to Kowloon Tsai Park, will likely fetch bids from HK$2.5 billion to HK$2.7 billion; or around HK$11,000 psf to HK$11,861 psf.
This falls short of the HK$1.6 billion or HK$17,976 psf paid by Chinachem Group for a luxury residential site at 3 and 5 Ede Road in Kowloon Tong in mid-October. The bid set a record for residential sites in the Kowloon area in terms of psf price.
But while developers are still keen to buy luxury residential sites, some analysts reckoned that the new rule on increasing floor area would have an impact on the price they would be willing to pay for the Inverness Road site.
Alvin Lam, director at Midland Surveyors, said property developers would consider the new rule when bidding, and this HK$2.5 billion forecast was at the low end of expectations.
Under the new policy, features and facilities like clubhouses, utility platforms and balconies, which are formerly exempted from GFA calculations, should not exceed 10 percent of the total GFA of a development.
This will likely have an impact on the saleable space of a development since these areas are pro-rated into the psf price calculations done by developers when selling apartments.
“The site is not located in the core Kowloon Tong area, but the surrounding environment is pleasant and units on higher floors will offer open views and the site could still be developed into low-density luxury residential units,” said Charles Chan Chiu-kwok, managing director at Savills Valuation and Professional Services for Greater China.
The selling price of the project could hit HK$20,000 psf when it launches in a few years, said Mr. Chan.