Hang Lung Properties bought out the remaining space that it did not yet own in a 68-year-old industrial building in Kowloon East this week, clearing the way for the Hong Kong-listed builder plans to redevelop the site into a residential tower with retail elements.
The developer, chaired by loquacious tycoon Ronnie Chan, paid the equivalent of HK$11,100 ($1,401) per square foot to purchase the remaining five units it did not own in the Amoycan Industrial Centre in Kwun Tong district’s Ngau Tau Kok area via a public tender that closed on Tuesday, according to the Hong Kong media.
The compulsory sale, which Hang Lung was able to trigger after buying up 85 percent of the space in the building, valued the circa 1950 former canning factory at HK$2.08 billion — the second highest value ever fetched in a compulsory sale for a Kowloon-located property.
Hang Lung Residential Project on the Way in Kowloon East
A Hang Lung spokesperson told the local media that the company plans to redevelop the 20,700 square foot property, which formerly served as a factory for the Amoy Canning company — a now defunct food processor, into a residential and retail property spanning approximately 186,300 square feet.
The spokesperson added that the company is looking forward to getting the project underway as soon as possible and it will make an announcement regarding the development details at a later date. The Amoy Industrial Centre acquisition may have special resonance for Chan, as his family’s Hang Lung Group became a power in Hong Kong real estate business by buying out Amoy Properties, the development division of Amoy Canning, in 1980.
Tuesday’s public auction, which was administered by Savills, fetched a compulsory sale valuation surpassed only by Wong Sun Hing Ltd’s 2016 buyout of the Kai Tak Mansion in Kowloon Bay among forced auctions in the Kowloon East area, after that sale notched a HK$2.29 billion price for the 58-year-old property.
Kwun Tong Location Boosts Value
In local media interviews, Charles Chan, managing director for valuation and professional services at Savills noted that the eight-storey industrial building is located in close proximity to the Kowloon Bay subway station as well as the Amoy Garden and the Tak Bo Garden housing estates. The site has a plot ratio of nine, with the residential floor area ratio standing at 7.5.
Chan added that government land auctions in recent years have drawn fierce competition among the major players, pushing more developers to pursue making piecemeal acquisitions of aging buildings as the raw material for redevelopment projects rather than try their luck in the land tender free-for-alls.
Built in 1950, the Amoycan Industrial Center has eight floors with the group floor being the retail shops. Hang Lung applied for compulsory sale for redevelopment of the building in 2017 under the city’s Land Ordinance. The Amoycan Industrial Centre was valued at the time at HK$642 million.
On June 21, 2016, a fire swept through a self-storage facility housed in the Amoycan building. The inferno took 108 hours to tame and claimed the lives of two firefighters. Hang Lung, which owned most of the building, and was exempt from installing sprinklers in the complex because of its age, donated HK$4 million as a compassionate payment to support the families of the deceased.