Hong Kong’s Central district has become the place where office price records go to be shattered. Less than a week after a floor in 9 Queen’s Road Central sold for a city-wide record of HK$60,000 ($7,643) per square foot, a strata-titled floor in World-Wide House was sold for HK$44,030 ($5,609) per square foot, the highest ever for the building just across Connaught Road from Exchange Square and the IFC.
The 11th floor of World-Wide House, a dilapidated commercial complex at 19 Des Voeux Rd Central, was sold for approximately HK$735 million ($94 million) according to media reports. The transaction value is below the asset’s asking price of HK$800 million ($102 million) when the soon to be former owner first put the 6,693 square foot (1,550 square metre) space on the market in January.
Property consultancy Savills assisted watch retailer Prosper One Holdings in disposing of the property to an unnamed investor, which is said to be planning to lease out its new prize.
Making HK$134M in 10 Months
The deal for the most expensive floor in World-Wide House should also get some recognition for its speed, with the seller having only purchased the floor in July last year for HK$601 million ($77 million). Prosper One Holdings’ deal to purchase the asset from COFCO Group’s Joy City Property at that time was at the price of HK$36,003 ($4,616) per square foot — which set a then-record for the circa-1980 tower. Ten months later the watch retailer has booked a profit of HK$134 million on the investment, as the property shot up in value by 22 percent.
Currently leased to Hong Kong-listed beauty salon Modern Beauty, the contract for the floor is due to expire next month. The beauty salon is said to be paying a monthly rent of HK$860,000 for the space, generating a 1.4 percent rental yield for the new owner.
World-Wide House is situated right above the Central MTR station in the city’s business hub. The building’s lower floors are host to money changers and kiosks handling remittances for overseas domestic works and other occupants of the 27-storey tower include realtor Midland Holdings, Asia Insurance and the Real Estate Developers Association of Hong Kong.
Rental Demand Helps Drive Office Asset Prices
Just last week, a floor in 9 Queen’s Road Central, an office tower just 300 metres from World-Wide House, was sold for HK$60,000 ($7,643) per square foot, setting the city’s price record per square foot of office space. In that deal, local investor the Winland Group paid a total of over HK$500 million ($64 million) for the 8,570 square foot 34th floor of the tower.
The increase in asset prices in World-Wide House and 9 Queens Road Central seems to be triggered by rising demand for office space in the city’s central business district. As of end-March, Central’s grade A office buildings had seen a 4.6 percent year-on-year growth in rent, according to data from JLL.
The increase in strata-title transactions has also been noticed by the city’s property agencies with CBRE’s Hong Kong unit having recently added a new speciality group to its Capital Markets team which is focussed on strata-title and mid-market sales.