Li Ka-shing Said Selling Hong Kong’s The Center to Mainland Group for $5.2B

Hong Kong’s richest man is reportedly selling his most valuable building, The Center office tower, for a record price of HK$40.2 billion ($5.15 billion). Li Ka-shing’s CK Asset Holdings – formerly Cheung Kong Property Holdings – agreed to dispose of its portion of Hong Kong’s fifth-tallest skyscraper to a mainland-led group, according to an account in the Hong Kong Economic Times.

The local financial daily, citing an unnamed source, identifies the buyer as a consortium headed by a mainland oil company. The group is also said to include one or two Hong Kong-based property investors. An official announcement of the sale is expected in the near future and the name of the building may change, according to the report.

If successful, the sale of the 73-storey, 130,032 square metre skyscraper in Central district would mark the largest-ever commercial property transaction in Hong Kong, far surpassing Evergrande Real Estate’s HK$12.5 billion ($1.61 billion) purchase of the Mass Mutual Tower in Wanchai in 2015. The price would also exceed the HK$23.3 billion ($3 billion) that Henderson Land Development shelled out for the Murray Road commercial site in Central this past May.

Has The Center Finally Sold?

Built in 1998, The Center at 99 Queen’s Road Central is the tallest building in CK’s portfolio and the fifth tallest in Hong Kong, housing top corporations including Goldman Sachs and Singapore’s DBS Bank. The property developer is reported to own 48 floors of the tower, after selling 11 floors to Malaysian developer Guoco Group in 1999, nine of which were purchased by DBS Group Holdings the following year. CK also sold the 60th and 79th stories in 1999.

According to the news report, the buyer is paying the equivalent of HK$33,000 ($4,226) per square foot for the asset. The Center has been reported to be on the market since August 2016, with an asking price of HK$35 billion ($4.5 billion). At that time, several Chinese state-owned companies were said to be preparing bids for the skyscraper.

Last October, a mainland-backed group was reported to be close to buying the tower from CK for HK$35.7 billion. Although the deal was expected to be announced the following month, no transaction took place.

Hong Kong-based Tai United announced a provisional agreement last month to sell the top floor of the tower to an unknown investor for $738 ($94.5 million). The sale price of HK$55,854 ($7,152) per square foot set a new record for a strata-titled office floor in Hong Kong.

CK holds about 17 million square feet (1.6 million square meters) of properties as of June, with more than 80 percent of its portfolio located in Hong Kong. The group controlled by tycoon Li Ka-shing has been offloading property assets in Greater China, as it shifts focus to opportunities in Europe and emerging sectors.

Given the financing difficulties that many mainland companies are facing amid the Chinese government’s tightening of cross-border capital controls, any deal with a mainland-led group is likely to take time to close.

Hong Kong Set for Most Expensive Building Sale

Should the deal occur as reported, The Center will be the most expensive building ever sold in Hong Kong, although the unit price would fall short of the HK$36,232 per square foot that Xu Jiayin’s Evergrande paid to acquire the Mass Mutual Tower from Joseph Lau’s Chinese Estates in 2015.

Henderson smashed that record earlier this year when it paid HK$50,064 per square foot for the Murray Road car park, which is approved for the development of a commercial building spanning up to 465,000 square feet (43,199 square metres) of gross floor area.

The rumoured sale of the Center follows a week after Shenzhen-based LVGEM (China) Real Estate Investment announced it was buying a waterfront building in the Kwun Tong area of Kowloon East from Wheelock & Company for HK$9 billion ($1.2 billion), in one of the biggest real estate deals in Asia this year.

Including the reported sale of CK’s Queen’s Road property, mainland investors have snapped up at least HK$81.5 billion ($10.44 billion) worth of buildings in Hong Kong since 2016.