A real estate investment fund managed by Andrew Moore’s Pamfleet is putting up for tender a retail center in Kowloon’s Lai Chi Kok with an asking price of HK$1 billion ($128 million). The tender follows the company’s $217 million sale of the Bonham Circus office building in Sheung Wan last month.
Nob Hill Square is a shopping mall located in the Nob Hill residential project in western Kowloon’s Lai Chi Kok neighborhood, just west of the rapidly developing Cheung Sha Wan area. The 100,000 square foot shopping centre, which houses restaurants, convenience shops and realtors in its three stories, is 96 percent leased, according to representatives of Colliers International, who are marketing the property on behalf of Pamfleet Real Estate Fund.
“The property presents a very attractive price per square foot of HK$9,000 ($1,150). It is difficult to find a retail mall project priced below HK$10,000 ($1,277) per square foot in the market,” said Reeves Yan, Executive Director of Capital Markets and Investment Services at Colliers International. Representatives of real estate investment firm Pamfleet, which manages the now-closed fund declined to comment on the tender when contacted by Mingtiandi.
Leasing Upgrades Could Boost Value of Kowloon Asset
“Generally the rental of the mall is about 30% below the market rate,” Yan pointed out. “Some tenants like Dialogue in the Dark, ParknShop are leasing large space in the mall with a huge discount. They provide value-adding potential for the owner if the big space is cut into smaller shops.”
Yan added that the tenancy of Dialogue in the Dark, a social enterprise which leases over 10,000 square feet in Nob Hill Square, expires in 2018, while supermarket ParknShop’s ends next year.
Originally developed by Cheung Kong Holdings in a joint venture with Far East Hotels, Nob Hill Square currently produces a monthly rental income of HK$2.8 million ($357,653), representing a 3.3 percent rental yield for the owner.
In addition to the mall, the sale also includes 43 car parking spaces and ten loading spots for trucks. Brokered by Colliers International and Savills, the tender will end on March 29, according to media reports.
Pamfleet Takes a Shine to Community Retail
Experienced in value-added real estate investments, Pamfleet upgraded the tenant profile of the mall after purchasing it from Li Ka-shing’s Fortune REIT in 2015 for HK$648 million ($83 million). As part of the repositioning of the retail asset, the investment manager introduced chain restaurants and education-related tenants to the 16-year-old shopping mall after the acquisition, according to Yan. Pamfleet’s team also rebranded the mall by redesigning its logo and opening up a Facebook page, which updates events in the retail space.
Perhaps best known for its involvement in the 2003 purchase and repositioning of the Infinitus Plaza on Des Voeux Road in Sheung Wan, Pamfleet seems to have acquired a taste for the city’s small-scale neighbourhood retail centres. In December, Pamfleet’s latest fund partnered with UK-based Chelsfield to purchase Provident Square in North Point from Fortune REIT for HK$2 billion ($256 million), which is also located in a residential project developed by what is now CK Asset Holdings.
Like Nob Hill Square, Provident Square is relatively small in size with a gross rentable area of 180,238 square feet (16,745 square metres) — just one-fourth the size of Hysan Place in Causeway Bay.
Fund Investors Learn to Love Hong Kong’s Neighbourhood Centres
Community retail properties have grown more popular with both domestic and international investors during the last year, as softening rents in prime retail areas have compressed returns for high-end space. Thanks to demand for necessities from local residents, investors find these neighbourhood properties to be safe investment opportunities, said Yan. Gaw Capital and US investment giant Goldman Sachs bought 17 community malls from Link REIT for HK$23 billion ($2.9 billion) in late November, the biggest retail property transaction in Hong Kong.
Not long after, veteran shop investor Tang Shing-bor acquired a retail centre at Tsuen Wan’s Bayview Gardens project for HK$330 million ($42.3 million) from Hang Lung Properties in December.