Hong Kong’s commercial property market got a jolt Thursday after a report broke that Hopewell Holdings, controlled by billionaire Gordon Wu, had agreed to sell the Kowloonbay International Trade and Exhibition Centre for HK$10 billion ($1.3 billion).
No official announcement has been made about the KITEC transaction, but property broker Savills celebrated the deal in a limited-circulation flyer republished in a Sing Tao media account. Contacted by Mingtiandi, Savills representatives said news of the deal was confidential.
The buyer is said to be a consortium led by local builder Billion Development & Project Management, which is said to be taking a 70 percent stake in the deal, according to an account in Sing Tao newspaper on Friday.
An industry insider told Mingtiandi that the commercial specialist hopes to redevelop the site just inland from the former Kai Tak airport as a strata-title office project. Both Hopewell and Billion declined to comment on the reported transaction.
Hopewell’s KITEC is a 1996-vintage artifact of Hong Kong’s function-over-form past, which holds significant redevelopment value thanks to the removal of height restrictions that once kept the skies clear for Asia’s busiest landing strip, before the opening of the current airport at Chek Lap Kok in 1997.
The current mixed-use structure includes office, retail and event space covering 1,775,000 square feet (164,903 square metres) of gross floor area, meaning the buyer is paying about HK$5,634 ($726) per square foot of GFA.
However, the 239,800 square foot site at 1 Trademark Drive in Kowloon East is now eligible for development at a plot ratio of 12:1, which would allow the new owner to build up to 2,877,600 square feet, or an increase of more than 61 percent from the current project.
Construction of a new building with the additional 1,102,600 square feet would require land premiums to be paid to the government.
The office portion of the current 14-storey structure occupies 734,140 square feet of GFA. Rents start at HK$20 per square foot per month.
Founded in 1994 by Cheuk Yi Yu, who also owns 24 percent of HKEX-listed Lai Sun Development and 29 percent of HKEX-listed Lai Sun Garment, privately-held Billion is 30 percent owned by Mico Chung’s CSI Properties, according to Hong Kong’s Webb-Site. Over the past few decades, the builder has made itself a leading player in development projects around Kai Tak.
The company’s previous projects include the Billion Centre commercial building in Kowloon Bay and the 27-storey YHC Tower just one block inland. Both developments are within a few minutes’ walk of the KITEC complex. The company also co-developed 38 Wai Yip Street in Kwun Tong, Kowloon East with Sino Land and CSI Properties. Including joint ventures, Billion’s website lists 10 projects in the Kowloon East area, with Sino Land and CSI among its frequent partners.
On the residential side, the company built the 840-unit Aurora apartment complex in Tsuen Wan, New Territories.
Hopewell’s Wu amassed his estimated $1.9 billion fortune by building roads, bridges and other infrastructure projects in Hong Kong and mainland China.
The 85-year-old tycoon made headlines last month when he touted an ambitious land reclamation project on Lantau Island to help solve Hong Kong’s housing and social problems.
Wu told Reuters that the Lantau project, spanning an area about a third the size of Manhattan, would improve the city’s competitiveness, though the first batch of residents isn’t expected to move there until 2034.
He also praised the Hong Kong government’s move to take back three private land parcels in the New Territories near the border with Shenzhen and rezone them for subsidised housing, calling it a step in the right direction.
Kowloon East Revival
In Kowloon East, a pair of recent acquisitions by global investors underscored the traditionally industrial area’s growing commercial appeal.
In February, industrial developer Goodman confirmed that it was 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.
The deal provided 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 hasn’t revealed its plans for the asset.
In April, US private equity giant Blackstone bought a 10-storey industrial building at 82 Hung To Road in Kwun Tong district from the property division of local conglomerate Emperor Group for HK$508 million.
The 1970-vintage building, known as New Media Tower, has a gross floor area of 89,500 square feet, meaning Blackstone paid HK$5,676 ($731) per square foot for the property.
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.