The sale of Chinachem group's new project Mount Anderson, which is located at Anderson Road in Kwun Tong, recorded a worse than expectant result recently. Under this scenario, the developer had no choices but to withdraw the sales promotion jobs and announced that the original site will be converted to an elderly centre. To put it simply, this incident seemed to have been resolved satisfactorily, but from another point of view, it is hard for the developer to gain back $3.1 billion land price and 1 billion construction fees.
Since the Lands Department has cancelled its pre-sale agreement, the developer will not be able to restart the sales jobs soon. Starting from submitting the tender, the developer seemed not to have an alternative plan for the failure sales of this project. Actually, nobody could predict only three units being sold after the opening sale of this project.
Over the past three decades, it is rarely to have a similar event like this. Due to the suddenness of this incident, the developer's new plan seems only be a preliminary draft without in-depth research.
Cheung Kong purchased a plot of residential land in the same district in early 2020. The land price was only $4,564 per square feet (psf.). In contrast, the average price sold by the lands department in the same district in recent years was about $12000 psf. Therefore, prospective buyers of this district will only focus on the new projects launched by Cheung Kong later. Subsequently, that same district's developers will have no choice but to cut the price to launch the new projects in future to enhance its competitive advantage.
Ever since the exposure of the incident about Chinachem Group's Mount Anderson, other local developers will be extremely cautious for submitting the tender offer to the Government projects in future. As anticipation, low-price offer will become a new normal. Under such circumstances, it is going to be harder for the Government to sell lands at market price and the land premium incomes will certainly decrease that is inevitable.