Commercial Building in Hong Kong’s Central Trades for $140M After Bank Pressure

A commercial tower in Hong Kong’s prime Central district has changed hands for HK$1.1 billion ($140 million) in a distressed sale, according to market sources who spoke to Mingtiandi.

The 28-storey building at 152 Queen’s Road Central traded at HK$18,197 per square foot for its gross floor area of 60,450 square feet (5,616 square metres), sources told Mingtiandi on Thursday. The nearly fully let tower generates a monthly rental income of HK$3.3 million, translating to an initial yield of 3.6 percent at the agreed compensation.

The property was sold by a joint venture between local property investor Lo Wah, known in the market as “Uncle Wah”, and a Hong Kong lawyer surnamed Chung, with the pair having developed the 2020-vintage building near the Central/Mid-Levels escalator. The buyer, described as an institutional investor from Southeast Asia, picked up the tower after lender DBS Bank triggered a sale that resulted in the joint owners losing all their equity, a source said.

This source expressed surprise at the “extremely good price” fetched by 152 Queen’s Road Central, which drew offers in the area of HK$900 million from other interested parties. Sale agents Colliers and CBRE had announced a public tender last August for the asset, which they valued at HK$1.4 billion.

“The majority of Grade A office buildings in Central are owned by various major developers, who typically prefer leasing over selling,” Thomas Chak, head of capital markets and investment services at Colliers Hong Kong, said at the time. “An en bloc premium commercial building with existing tenancies is exceptionally rare, offering a unique and valuable investment opportunity in the market.”

Absence of Activity

Situated within a three-minute walk of Sheung Wan MTR station, 152 Queen’s Road Central occupies a site area of 4,030 square feet and features dual entrances facing Queen’s Road Central and Wellington Street.

The building consists of retail and dining spaces from the ground floor to the 15th floor, while the 17th to 30th floors are dedicated office spaces. The tower is designed with one unit per floor, with each level spanning between 2,531 and 3,733 square feet, according to the sellers.

The latest trade during a quiet period for city office deals comes after Mingtiandi reported in November that Hong Kong Metropolitan University had agreed to buy a Kowloon office building that once served as the local headquarters of defaulted mainland property firm Cheung Kei Group. HKMU scooped up the former Cheung Kei Center at a 62 percent discount to a HK$7 billion valuation of the property in 2022.

A Kowloon East office building invested by Hong Kong fund manager Gaw Capital Partners and HSBC Asset Management, 133 Wai Yip Street, had been scheduled to go up for auction in September, but the exercise was postponed to a later date, said auctioneer JLL.

Five-Year Slide

At the end of last June, capital values of Grade A offices in Hong Kong had plummeted 41.6 percent from their 2019 peaks, according to JLL calculations.

Transaction volume of non-residential big-ticket deals in 2024 totalled just HK$28.5 billion ($3.7 billion) as of 6 December, Cushman & Wakefield said in a report last month.

Grade A office rents in the city were down 5.9 percent for 2024 as of mid-November, per Cushman & Wakefield, and the consultancy predicts as much as a 9 percent drop this year.