Kai Tak starts to show potential

Urban development in Kai Tak

Back in late 2013, I wrote in my column commenting on the property value of the Kai Tak district in East Kowloon. I predicted that, given the district’s geographical advantages and surrounding transport system, developers who bought a substantial amount of property at HK$6,000 per square foot at the time would see tremendous returns in a couple of years.

More information on Kai Tak: 

>> A star is born - Kai Tak

>> Kai Tak Ready for Take Off

Last year, the Urban Renewal Authority presented De Novo as the first saleable development in the area. The initial HK$11,000 per-square-foot price was widely deemed as too high. Poor apartment layout and the general stagnancy of the market added to the development's very slow sales. Naturally, the subpar performance of the first development led to the restrained pricing of future property offerings in the area.

A few months later, One Kai Tak was launched as the first development under the ‘Hong Kong Property for Hong Kong Residents’ scheme, with the first batch of units selling at around HK$13,000 per square foot. The press initially criticised the hefty price tag, expressing their concerns that the price point was going against the intention of the scheme.

One Kai Tak

>> Learn more about: One Kai Tak

At the time, a group of old friends and I got together and discussed candidly about whether it was worth the price. As an industry insider, I have a personal policy of never talking about property businesses with friends to avoid conflict of interest. When asked for opinions, I usually refer them to my weekly column. However, in this case, as I firmly believed that the Kai Tak area was packed with huge potential which was only starting to reveal itself, I asserted that the pricing was very reasonable. I also speculated that since it was this particular mainland developer’s first venture into the Hong Kong market, they would hope to achieve success and establish a sound reputation for future projects in the city.

To be honest, I hadn’t invested in property since the cooling measures were introduced. However, given the tempting prices of this development and the fact that it wasn’t very welcomed by the market, I made it clear to my friends that I would use it as an opportunity to make my way back to the market, hoping to purchase a unit. This served as a confidence boost to my friends, and all of us entered the lotteries for the development.

In the following days, as homebuyers rushed to visit the development and were impressed by its model units, the media had an about-face in their attitude towards One Kai Tak, as evident in their positive coverage.

After the first round of lotteries, a few friends and I were lucky enough to be among the first group of people to select our units.
On the opening day, the atmosphere of the box office was buzzing and people were even making multiple purchases at once, and the first batch of offerings sold out immediately. Even the additional units that the developer offered at higher prices were picked up by eager buyers.

One developer recently bought four neighbouring lots of land in Kai Tak to lay ground for building luxury homes in the area. So how high can the price of Kai Tak properties go in the future? We will just have to wait for the answers from developers.

>> Issue 272: Cooling measures block transactions

>> Issue 274: The effect of loosened Green Form subsidised home policies