Joy City Scores 49% Return By Flipping Hong Kong Office Floor for $77M

Mainland investors may have a keen appetite for Hong Kong office property, but one company from north of the border is taking advantage of ever-loftier values by offloading a prized piece of real estate in the city’s Central district. Shopping mall developer Joy City Property has sold the full 11^th floor of World-Wide House, a Grade A office tower adjacent to Central station, for HK$601 million ($77 million), mainland news portal Guandian reported last week.

The 16,693 square foot (1,550 square metre) space changed hands at a price of HK$36,003 ($4,616) per square foot, setting a new record for the building at 19 Des Voeux Road. Joy City’s owners had purchased the floor for HK$410 million in 2012, according to Guandian, and leased out the space, collecting rental income that grew steadily from HK$3.1 million in 2012 to HK$8.9 million in 2016.

The circa 1980 skyscraper sits just five hundred metres from harbour-side landmark Exchange Square and has a three-storey retail podium. Tenants include local property agency Midland Realty, the local branch of the Association of Chartered Certified Accountants, and the Real Estate Developers Association of Hong Kong. Asking rents in the mid-zone of the 27-storey building currently range from HK$75-85 ($9.62-$10.90), according to an online property listing.

Cashing in on Hong Kong’s Sizzling Office Investment Market

Henderson Land’s record-breaking purchase of the Murray Road car park site in Central for HK$23.3 billion ($3 billion) this past May – setting a new high price of HK$50,064 ($6,400) per square foot – is said to have boosted values at World-Wide House. Despite accepting less than its initial asking price, Joy City was able to reap a profit of HK$191 million ($24.5 million) on its five-year investment – an appreciation of 46.6 percent.

Hong Kong’s buoyant strata-title investment market has recently seen properties traded at comparable prices. In the first quarter of the year, a space comprising two units on the 14^th floor of 9 Queen’s Road Central was sold for HK$39,570 per square foot, according to global property consultancy Colliers.

Hong Kong-listed Joy City is the flagship real estate business of mainland state-owned food conglomerate COFCO Group. Aside from its retail portfolio, Joy City will continue to hold four office and residential properties for investment in the mainland and Hong Kong, including COFCO Tower in Causeway Bay, and five mainland hotels.