CBRE this week announced the sale of the lower half of an industrial building in an up-and-coming Hong Kong district which is rapidly transforming from workshops to prime office projects.
Industrial developer Goodman confirmed to Mingtiandi today that it is purchasing the ground through the fourth floors of the Seapower Industrial Centre at 177 Hoi Bun Road in Kowloon East’s Kwun Tong district, with the asset changing hands at HK$570 million ($73.5 million).
The deal provides the Australian firm with just under 50 percent of the space in the building next door to Sun Hung Kai’s Two Harbour Square office project. Goodman has yet to comment on its plans for the asset, which is located in a neighbourhood which has been a popular location for redevelopment under the Hong Kong government’s industrial revitalisation scheme.
On the Waterfront
“Seapower Industrial Centre is located at the corner of Hoi Bun Road and Tsun Yip Street, a prime real estate spot in Kwun Tong that faces directly onto Kai Tak Cruise Terminal with a full sea view,” said Reeves Yan, executive director and head of capital markets at CBRE Hong Kong.
Goodman’s latest addition to its Hong Kong portfolio spans 117,381 square feet (10,905 square metres), and according to industry experts with knowledge of the property, the ground floor to the second floor are operated as cold storage, the third floor is owner-occupied and the fourth floor is tenanted. The ownership of the upper floors, which were not included in the transaction, is heavily fragmented, making the building difficult to unify.
The consideration for the slice of the 1972-vintage building works out to HK$12,000 per square foot for the ground floor and HK$3,936 per square foot for the other four floors in the 11-storey building.
The seller is Samson Paper, a paper and packaging supplier currently under liquidation. According to public records, Samson purchased the half block in 1987 at a price of HK$38.48 million and sold the asset after 34 years of possession.
For its part, Goodman offered a brief summary of the thinking behind the purchase.
“We can confirm that Goodman has signed an agreement for the acquisition of the Seapower Industrial Centre in Kwun Tong for HK$570 million,” a company representative told Mingtiandi. “The acquisition is in line with our long-term strategy, which aims to provide our customers the space they need to succeed by offering sustainable solutions and service in high-quality and strategic locations.”
Kowloon East Revitalised
Regardless of Goodman’s plans for the property, Seapower Industrial Centre sits on a strip primed for revival as Kwun Tong transitions from an industrial zone to a new business district.
Next door to the Seapower Industrial Centre, the Hong Kong Mortgage Corporation (HKMC) last September agreed to lease 70,000 square feet at Sun Hung Kai’s Two Harbour Square as it prepares to relocate from Central.
Also emblematic of the shift is The Quayside, a joint venture development by Link REIT and Nan Fung consisting of two connected office buildings within walking distance of Seapower at 77 Hoi Bun Road. US financial services giant JP Morgan now occupies nine floors in one of the towers.
Another high-profile tenant in Kwun Tong is FTLife Insurance, which occupies four floors of the LVGEM Neo building at 123 Hoi Bun Road as part of a consolidation of its team into newer buildings in Kowloon East after leaving its old home in Tsim Sha Tsui’s Harbour City.
In 2018, the Hong Kong government reactivated a previous revitalisation scheme in a bid to convert ageing industrial buildings to more suitable uses such as offices and hotels. In a 2019 analysis of the scheme, property consultancy Colliers predicted that Kowloon East would become the next popular spot for industrial revitalisation.