Hong Kong-listed CSI Properties has acquired the remaining four floors in a building on Wellington Street in Hong Kong’s Central district for HK$185 million ($23.59 million), according to an account in the Hong Kong Economic Times
The purchase brings the Hong Kong-based developer’s ownership of the 1960s-era property to 100 percent, putting it in a position to redevelop the site, together with two neighbouring buildings that the developer had acquired earlier, into a new project of up to 45,000 square feet (4,180 square metres) in floor area.
The purchase by the developer helmed by dealmaker Mico Chung Cho-yee is the company’s latest in a series of acquisitions of aging Hong Kong properties as CSI focuses on opportunities for redevelopment in the world’s most expensive real estate market.
Going Vertical in Soho
With its latest purchase of four of the five floors in 92 Wellington Street, CSI has aggregated a 3,000 square foot site by joining the property with 94 and 96 Wellington Street, which it had acquired earlier, along with the first floor of 92 Wellington Street.
Having now acquired the ground floor, along with the second through fourth floors of 92 Wellington, CSI, according to local media reports, plans to redevelop the combined site into a “Ginza-style” vertical retail building just a few steps from the Mid-levels escalator.
The aging building, located about 450 meters from the Central MTR station, was last year listed for sale at an asking price of HK$250 million. Its street front unit, currently occupied by MANA! Café, has a gross floor area of 800 square feet (74 square meters), while the upper floors each have a usable area of 576 square feet.
CSI is paying the current owner of the 92 Wellington space a HK$150 million mark-up over what the HK$35 million that they paid to purchase the property in 2011.
CSI’s Favourite Street in Central
CSI’s acquisition came just over one month after it completed the purchase by compulsory sale of another building on Wellington Street, just 200 metres down the road cutting through Central’s Soho area.
In its July deal, CSI took over the Tsang Chiu Ho building at 160-164 Wellington Street, which is home to the sole surviving branch of the Lin Heung Tea House, one of the city’s most famous dim sum restaurants.
The pair of Wellington Street deals are part of a years-long strategy by CSI, with the company having purchased 94 Wellington for HK$228 million in 2017 and it bought up 96 Wellington for HK$105 million in 2014.
After earlier partnering with with Indonesian tycoon, Oei Hong Leong, a son of the founder of Lippo Group to found CSI in the 1990s, Chung later worked for Richard Li, the younger son of billionaire Li Ka-shing, at Li’s Pacific Century Group.
In June CSI sold three three 1960s-era buildings in Kowloon’s Tsim Sha Tsui area to Hong Kong’s K&K Property for HK$1.8 billion with K&K said to be planning to redevelop the aging properties.
Last year the developer had teamed up with Chongqing-based developer CC Land and Asia Standard International Group (ASI) to purchase the Octa Tower in Kowloon Bay from Nan Fung for HK$8 billion ($1 billion).
Hong Kong Market Slows Down
CSI made its latest acquisition in Central after the volume of commercial real estate transactions in Hong Kong fell over 42 percent during the second quarter of this year, as tighter lending conditions in the mainland and concerns over interest rates combined with discontent over the government’s extradition bill to put a dampen investor sentiment.
The pressures that created the slowdown in deals also pushed down prices for income earning real estate assets by 1.3 percent between April and June when compared with the first quarter of the year, according to the latest edition of the Global Cities Commercial Property Price Indices report published by RCA.