Hong Kong-listed developer Hang Lung Properties is said to have agreed to sell an industrial building in Hong Kong’s Cheung Sha Wan area to a consortium of investors for HK$4 billion ($510 million), according to local media accounts citing sources familiar with the reported transaction.
The developer known for its Plaza 66 commercial project in Shanghai and a host of Hong Kong residential developments has yet to announce a deal involving the building at 9 Wing Hong Street in the northwest Kowloon district, however, the sources cited in the story indicated that a statement is imminent.
The 379,139 square feet (35,223 square meter) building, which is currently leased to office tenants, is the most valuable among a set of four assets which Hang Lung put on the market at the beginning of this year in a drive to raise capital as the developer undertakes new commercial projects in Hong Kong following a challenging 2018.
Selling Properties After a 2018 Sales Slide
Should Hang Lung receive the reported compensation for the 35-storey tower, it would be equivalent to a price of just over HK$10,550 per square foot for the building where office units are currently listed at rates of HK$24 per square foot per month. The building, which has three floors of parking below 35 storeys of office space has floor plates ranging from 9,500 to 12,017 square feet.
The 1997 vintage building is located around 200 metres from the Lai Chi Kok subway station and the property has already been approved for commercial use.
In February of this year, local media reported that Hang Lung, in a bid to offload non-core properties, had appointed an agent to sell a set of four assets for a total of HK$9 billion in a tender scheduled to end in April.
Apart from the 9 Wing Hong Street property, the developer is also said to marketing a second Cheung Sha Wang asset — an 11-storey building at 822 Lai Chi Kok Road which carries a reported asking price of HK$1 billion.
Further south in Kowloon, Hang Lung is said to have made available a 1,000 spot parking facility at 1112 Canton Road in Mong Kok for HK$1.5 billion, and in Tsim Sha Tsui the company is offering the Hanford Commercial Centre on Nathan Road for HK$2.5 billion.
Hang Lung, chaired by loquacious tycoon Ronnie Chan, reported in late January that the group’s total revenue decreased 16 percent to HK$9.4 billion in 2018 due to lower residential sales. The developer’s property sales income dropped 64 percent last year to HK$1.2 billion, while total operating profit decreased 14 percent to HK$6.8 billion.
New Hong Kong Projects in the Pipeline
Despite the 2018 sales challenges, Hang Lung is undertaking at least two major new developments in Hong Kong.
In March, the company paid the equivalent of HK$11, 100 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, clearing the way for it to redevelop the Kowloon East site into a residential and retail property spanning approximately 186,300 square feet.
The last month Hang Lung Properties followed up with an announcement of a plan to invest HK$2.56 billion to develop a new commercial project on sites it already owns on Electric Road in the city’s North Point area. For the Electric Road development, Hang Lung Properties is cooperating with its parent, Hang Lung Group, to redevelop eight aging buildings in the western Hong Kong district into a new 105,000 square foot project.