Hong Kong’s former Kai Tak Airport – from runway to high-end residential marketApril 26, 2019 / By
Hong Kong’s former Kai Tak Airport, now commonly referred to as the Kai Tak Development or KTD, has been redeveloped into a 320-hectare mixed-use precinct that will redefine the Kowloon residential market. According to government estimates, the resident population within KTD is expected to rise from 50,000 in 2016 to 134,000 by 2036.
Around 50,000 residential units are estimated to be delivered to market upon project completion. This will include 12,600 public housing units to help alleviate the tense housing shortage problem in Hong Kong as well as a number of sites for private housing development (Figure 1). Of the 22 sites earmarked for private residential development, 18 have already been sold via public tender while the remaining four that are located on the old runway strip have been listed on the government’s current FY2019/20 land sale programme.
Figure 1: KTD Master Plan
Source: Lands Department, JLL Research
Significant construction is already underway with six private housing projects completed to date. These projects have provided around 4,500 units with the current average unit price on saleable area being 50% higher than mass residential projects in the overall market. Over the next three years, a further 5,500 units are expected to be released in the market.
The burgeoning residential market in the KTD is developing into a high-end residential area, with new projects drawing more affluent buyers. In this regard, the KTD is showing similar characteristics to the residential market that has emerged around the Olympic MTR station in West Kowloon—a cluster of residential developments and shopping centres that lie within a 15 minute commute from Central—with housing prices in both areas already at very similar levels. However, whereas the broader areas surrounding the Olympic MTR residential cluster are dominated by older properties, Kai Tak is being positioned as a second CBD for Hong Kong and includes a high concentration of commercial development, world-class sports park and cruise terminal. Moreover, land prices have doubled since 2016, indicating that developers are confident in the long-term prospects for KTD. Local developer, Sun Hung Kai Properties, recently paid over HKD 17,000 per sq ft (accommodation value) to acquire two sites through government tender, including a site located next to the future Kai Tak MTR station that set a new record for a residential development site. Recent land sale results also suggest that the development sites along the former runway are likely to be developed into more luxurious properties and comparable to residential properties at Kowloon Station.
Although KTD is still in the early stages of its development, the land sale results and new residential developments has already provided us with a glimpse of how the area will develop over the longer-term. Coupled with the completion and opening of the future Kai Tak MTR station and sports stadium, the area will continue to undergo significant transformation. Whilst an uncertain economic environment is currently affecting the city’s housing market, the KTD looks well positioned to develop into another high-end residential property market similar to what currently exists around the Olympic MTR, only with potentially more upside.
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