Hong Kong’s richest family may have struggled to find funds needed to keep their Mid-Levels property painted
Just three months after winning a Kowloon Tong residential site for HK$1.6 billion, Hong Kong-listed Lai Sun Development continues to focus on the city’s quickening luxury market, with its acquisition of a pair of adjacent properties in the Mid-Levels area for a combined HK$1.3 billion ($166.8 million).
Analysts expect luxury residential apartments to be built on the site at on 1-1A Kotewall Road, with Cyrus Fong, senior director for valuation and advisory at Knight Frank, noting that should the property be redeveloped, it could be worth from HK$2 billion to HK$2.5 billion upon completion.
Lai Sun is paying as much as HK$22,628 per square foot of floor area to acquire the 74-year-old buildings from an in-law of billionaire Li Ka Shing, according to sources familiar with the deal.
The developer is making its latest effort to boost its pipeline of upscale housing projects as luxury home prices in the city are set to rise as much as 5 percent in 2022, according to a report by property services Knight Frank last month.
Traditional Luxury Area
Located at the junction of Kotewall Road and Robinson Road, the properties will provide their new owner with a consolidated 11,490 square foot (1,067 square metre) site. Should the developer win approval to boost the plot ratio to the area’s current maximum of 5 from the current 1.3, Lai Sun’s new residential project could yield a maximum floor area of 57,450 square feet.
Lai Sun chairman Peter Lam is refilling his residential pipeline
Given its location, the developer may opt to build large homes averaging 2,500 square feet each to appeal to mid to high income families, said Hannah Jeong, head of valuation and advisory services at Colliers Hong Kong. If Lai Sun pursues this strategy, the project would provide less than 20 homes, she added.
The Mid-Levels, a traditional luxury residential market just uphill from the prime commercial district in Central, is an area highly sought after by developers, though land supply is limited according to Fong.
“Average selling prices of new apartments in the Mid-Levels have ranged between HK$30,000 to HK$40,000 per square foot for smaller units in recent years”, said Fong, who added that units at Lai Sun’s newly acquired property could sell for around HK$40,000 to HK$50,000 per square foot upon completion.
More Mid-Levels Flats
Lai Sun’s purchase is the latest in a string of luxury project acquisitions in Hong Kong islands prime residential districts within the last two months, including Henderson Land Development acquiring a residential property valued at HK$522.1 million on Robinson Road in the Mid-Levels through a compulsory sale for redevelopment last month.
Knight Frank‘s Cyrus Fong
The same street was also a source of quick cash for China Aoyuan Group in November as the embattled mainland developer offloaded its 86.4 percent ownership in the Yin Yee Mansion on 63-67 Robinson Road for HK$900 million.
Within a 10-kilometre (6.2-mile) drive of Lai Sun’s Kotewall Road site, Nan Fung Development within the last month bought up a majority of the units at a set of lane houses in Hong Kong Island’s exclusive Jardine’s Lookout neighbourhood for a combined price of over HK$1 billion, with that project also expected to be redeveloped as luxury housing.
Lai Sun Expands Residential Pipeline
Including the developer’s new Mid-Levels property, Lai Sun over the past year has added three major projects to its residential pipeline in Hong Kong. The acquisitions took place as the city recorded its largest ever volume of luxury home sales in 2021, with 129 residential properties valued at HK$100 million or more changing hands during last year, according to a report last month by Centaline Property Agency.
The developer controlled by Hong Kong billionaire Peter Lam Kin-ngok recorded turnover of HK$2.5 billion from property development and sales in the year that ended on 31 July, 2021, which was up 48.1 percent from the same period in the preceding year, according to its annual report.
Lai Sun noted in the report that at the time it had just two wholly owned residential projects under development in Hong Kong. This pair of projects – one each in Kwun Tong and Yuen Long — would provide the developer with approximately 105,900 square feet of homes to be completed within the next two years.
About a year ago, Lai Sun joined a consortium of four developers to win a tender for a residential project just south of the Wong Chuk Hang station on the South Island Line for HK$6.44 billion, or about HK$10,123 per square foot.
In October last year, the developer bested 16 competing bids to win a residential site in Kowloon Tong’s 79 Broadcast Drive, expected to yield about 50 luxury homes.
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