China Resources Buys Hong Kong Shopping Centre From Lai Sun, Empire for $68M

State-run conglomerate China Resources continues to be one of the biggest buyers of Greater China real estate during the current downturn with a property unit of the Shenzhen giant having picked up a commercial asset in the New Territories in its second Hong Kong retail investment this year.

China Resources Longdation has acquired Greenwich Village, the waterfront retail podium and car park of the Alto Residences condo development in Tseung Kwan O, from a joint venture between local developers Lai Sun Development and Empire Group, market sources confirmed to Mingtiandi, with local media reports pricing the transaction at HK$535 million ($68 million).

With capital values of high street shops in Hong Kong now averaging 35 percent below year-end 2019 levels, the report price for the four-storey shopping complex means the property investment and management arm of state-owned China Resources Group, which has been one of the most confident buyers of Hong Kong commercial and industrial assets in recent years, is purchasing the asset at a 37 percent discount to the owners’ original asking price of HK$850 million ($109 million).

In January, China Resources Longdation acquired the KF88 retail podium in the New Territories’ Kwai Fong area from local investor Francis Law Sau-fai for HK$310 million ($40 million).

Optimistic on Retail

“With the new Immigration Headquarters and Tseung Kwan O Government Office coming into use, coupled with the upcoming 418,000 square feet Tseung Kwan O Central Park, it is expected that the demand for retail and parking spaces in the area will surge in the future,” Jason Wo, deputy senior director of investment at Savills Hong Kong, which managed the tender for the asset said in a statement when the tender was launched last year. The property consultancy has not commented on the buyer of the asset or on pricing for the transaction.

Lai Sun and Empire Group, a local builder founded by the late former Sun Hung Kai Properties chairman Walter Kwok, completed Alto Residences in 2018 as a 50:50 joint venture, with Greenwich Village forming the retail element.

The partners engaged Savills in October 2023 to manage the tender sale for Greenwich Village, which concluded last month. The property is now 93 percent occupied by tenants including restaurants, fitness and wellness establishments, and an international kindergarten, according to the property agency.

Located a seven-minute walk from the Tseung Kwan O MTR station, the podium has 23 shops and 154 parking spaces spanning 102,582 square feet (9,530 square metres) of gross floor area across the ground and first floors, as well as two basement levels.

The podium generated monthly net rental income of HK$2.6 million as of October 2023, while the car park brought in an additional HK$320,000, according to local media accounts.

The reported acquisition aligns with China Resources Longdation’s positive outlook on the city’s retail recovery, with Cusson Leung Kai-tong, general manager of the company’s asset management division, telling local media last month that the company expects leasing for Hong Kong’s neighbourhood shopping centres to strengthen this year.

IPO Plans

China Resources Longdation’s retail acquisitions come as the company is reportedly preparing for a Hong Kong IPO of a portfolio of its property assets in an offering which could raise from $500 million to $1 billion, according to media accounts.

The prospective listing would see the company’s Hong Kong office and retail assets, which were reportedly valued at HK$20 billion, listed as a REIT in 2024 or 2025. Those assets include the China Resources Building office tower and the Brim 28 retail podium of the Causeway Centre residential building, both of which are located in Wan Chai.

Other properties in China Resources Longdation’s portfolio include the All Seasons Place office, retail and hotel complex in Bangkok, as well as the St. Regis Hong Kong, along with other residential and hotel assets in Hong Kong and mainland China. The company also owns property management firm Synergis, which manages the Elements mall in West Kowloon, as well as jewellery and handicraft retailer Chinese Arts & Crafts.

Formerly known as China Resources Property, China Resources Longdation operates independently of Hong Kong-listed property developer China Resources Land, with both being subsidiaries of China Resources Group.

Other units of China Resources Group have also been making property acquisitions in Hong Kong in recent years, including food and beverage subsidiary China Resources Enterprises agreeing to buy the Wan Tau Tong Square mall in Tai Po from mainland investor Hugo Lam Chi-fung for HK$1.36 billion ($170 million) in 2022.

That deal came a month after China Resources Logistics bought a pair of warehouses in Chai Wan and Shatin from Kerry Properties for HK$4.62 billion ($588.6 million) as its fourth and fifth industrial acquisition in the city in less than two years.

Note: An earlier version of this article misspelled the surname and provided an outdated job title for Jason Wo of Savills. The article has been updated to provide the correct information and Mingtiandi regrets the error.