Henderson Land Sells Golden Centre in Hong Kong for $563M

Henderson Land has agreed to sell Golden Centre in Hong Kong’s Sheung Wan district to an undisclosed buyer for HK$4.4 billion ($563 million) according to a statement by the real estate developer to the Hong Kong stock exchange.

While Henderson has not yet disclosed a buyer for the 156,000 square foot (14,500 square metre) tower at 188 Des Voeux Road, broker gossip has pointed to Shenzhen as the home of the 25-year-old building’s new owner. Mainland investors have set a number of new records buying Hong Kong assets in the last year as Chinese institutions and developers indulge in high levels of liquidity in their domestic market and a new-found taste for non-renminbi assets.

The price that Henderson received for the 27-storey building works out to HK$28,000 per square foot, and upon completion of the deal expects to book a gain of just under HK$2 billion attributable to the group’s underlying profit, according to the company’s statement. The developer controlled by tycoon Lee Shau-kee says that it expects to close the transaction by 1 December.

Mainland Buyers Have Been Hungry for Hong Kong Properties

Acquisitions by mainland buyers have helped drive prices for Hong Kong commercial assets to new heights in the past year, with Shenzhen billionaire Chen Hongtian’s Cheung Kei Holdings agreeing to buy the east tower of Wheelock and Company’s One Harbourgate in Kowloon for HK$4.5 billion less than two months ago.

That acquisition by Cheung Kei came just eight months after Wheelock had sold the west tower and retail block in the commercial project to another mainland investor, China Life, for HK$5.86 billion ($755 million). Those deals were preceded by mainland financial giant China Everbright spending HK$10 billion ($1.29 billion) to acquire the Dah Sing Financial Centre in Wan Chai in February 2016, and developer China Evergrande set a new Hong Kong price record in November last year by acquiring the Mass Mutal Tower in Wan Chai for HK$12.5 billion.

While China’s renminbi has become more stable against the US dollar in recent months, the mainland currency still has lost around 5 percent of its value against the greenback in the last year, prompting many mainland investors to look for assets denominated in foreign currencies.

Rising Rentals Boost Value of Sheung Wan Project

Developers such as Henderson have benefitted from rising office rentals in Hong Kong, where an influx of mainland tenants has helped drive office rentals to the highest level in the world. Average office rentals in Central, less than a kilometre east of the Golden Centre, average HK$178 per square foot pe month, some 76 percent more than the price in Manhattan, according to a study released this week by real estate agency Knight Frank.

Once considered off the beaten track, Sheung Wan, which is just one metro station west of Central, has been gaining popularity as a business destination, helping to drive up the value of real estate in the district. Almost six years ago Andrew Moore’s Pamfleet bought the former Vicwood Plaza, across the street from Golden Centre, and redeveloped it as Infinitus Plaza, where it now commands office rentals in the neighborhood of HK$57 per square foot per month, according to data compiled by Mingtiandi. Leases signed at Golden Centre this year have averaged around HK$45 per square foot per month.