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Wheelock deems it paid market price for HNA's Kai Tak, Hong Kong, land plot

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Wheelock deems it paid market price for HNA's Kai Tak, Hong Kong, land plot

Hong Kong property developer Wheelock and Co. Ltd. said during a 2017 earnings media conference that they paid a reasonable price to pick up cash-strapped HNA Group (Hong Kong) Co., Ltd's land parcel in the city's new Kai Tak development area.

"We think the price is at market levels," Douglas Woo, chairman and managing director of Wheelock, said during the conference March 12, referring to the price tags of new apartments nearby, adding that the company plans to take three to four years to complete a residential project on the site.

Wheelock announced it agreed to buy a plot of land in Kai Tak in Hong Kong's Kowloon area from HNA for HK$6.36 billion March 9, as the Hainan-based Chinese conglomerate accelerates its asset disposals to repay its debt. HNA has sold three out of four sites it previously acquired for record prices in the Kai Tak district, all within a month.

Wheelock's bid is 15% higher than the HK$5.53 billion HNA paid for the 7,318-square-meter site in January 2017.

Woo said the company will continue to be interested in bidding for land situated at Kai Tak — one of Hong Kong's biggest and highest-profile new development areas.

In response to market concerns over the company's significant business overlap with its subsidiary Wharf (Holdings) Ltd., which also bought a HK$12.45 billion residential site in Hong Kong in January, Woo does not see it is a problem. He explained that both companies have traditional track records of investing in sites to develop residential properties.

"We are satisfied with our existing structure," he said, adding that there is no plan to privatize Wharf Holdings at the moment.

Wharf Holdings Chairman Stephen Ng Tin-hoi said earlier in March that the two companies would not create a specific division for land bidding since Hong Kong has a sufficiently large property market.

Wharf Holdings in November 2017 spun off its subsidiary Wharf Real Estate Investment Co. Ltd. as a separate listing on the Hong Kong stock exchange's main board. The latter's portfolio comprises six Hong Kong investment properties.

Separately commenting on the property market outlook, Woo said he still sees strong housing demand in Hong Kong as the developer sold out all 750 apartments offered at its new development in Lohas Park in the New Territories area over the March 9 weekend.

But he mentioned interest rate hikes are a possible risk that the real estate market should be fully prepared for going forward.

Woo also expects the company's 2018 contracted sales to exceed HK$10.00 billion.