New Price Records Set in Hong Kong as Mainlanders Buy Up Office Space

A high floor of Hong Kong’s Far East Finance Centre in Admiralty has sold for HK$540 million ($69 million) to what is said to be a mainland buyer. The deal, which equates to a price per square foot of HK$50,000 ($6,407), is a record high for the area on the eastern edge of the city’s downtown business district.

The 33rd floor of the building at 16 Harcourt Road, spanning 10,800 square feet (1,003 square metres), was sold to a Chinese-backed organisation, according to market sources cited by the Sing Tao Daily. The new buyer plans to hold the property and collect rent from the newly signed tenant, a financial institution that is leasing the space at HK$110 ($14.10) per square foot.

The previous owners purchased the entire floor for about HK$92.9 million in 2005 and held it for 12 years, earning a book income of over HK$447.1 million while the asset appreciated more than 4.8-fold. The new transaction implies a 2.6 percent yield.

The price also marks a record high for the 48-storey tower, topping the high watermark set last December, when a unit on the 23rd floor of the building sold for HK$38,200 per square foot – at the time the most expensive space in the Hong Kong market.

Shun Tak Centre Floor Sells for $41 million

The cost of office space is also rising in the Shun Tak Centre harbourfront complex in Hong Kong’s Sheung Wan district. Superactive Group recently announced it had purchased 10,011 square feet (930 square metres) of space on the 15th floor of the project’s Western Tower for more than HK$320 million ($41 million), which the Hong Kong-listed consumer electronics maker will use as its headquarters office and principal place of business.

Superactive bought units 1501-1502, 1510, 1511, 1512A and 1512B in the 39-storey tower for a price per square foot of HK$32,000 ($4,100), according to the statement, which also says the group is looking to broaden its fixed asset base. The vendor is identified as Hong Kong-incorporated Front Land Properties Limited.

Superactive is paying more per square foot than the previous record achieved by developer Hong Kong Resorts International (HKRI) when it sold the entire 22nd floor of China Merchants Tower in the same complex for HK$750 million ($95.9 million), or HK$30,900 per square foot in September. That marked the highest unit price in the project and the city’s biggest-ticket strata-titled office deal to date.

Besides the twin grade A office towers, the Shun Tak Centre commercial complex at 168-200 Connaught Road Central also includes a four-storey retail podium and serves as the Macau Ferry Terminal.

Murray Road Mega-Deal Drives Up Prices

Industry experts told the Sing Tao Daily that landlords of grade A buildings in Admiralty have jacked up their asking prices in the wake of Henderson Land Development’s record-smashing HK$23.3 billion ($3 billion) purchase of the Murray Road car park site in Central this past May.

The crown for priciest floor space in Hong Kong still belongs to the top floor of The Center skyscraper in Central, which sold for a total of HK$738 ($94.5 million) in September, amounting to HK$55,854 ($7,152) per square foot for the vacant 13,213 square foot (1,228 square metre) space.

Earlier this month, Li Ka-shing’s CK Asset Holdings announced it was offloading its portion of the same tower to a mainland-led consortium for HK$40.2 billion ($5.15 billion) in the largest-ever sale of a single building. Despite the record set by the earlier disposal of the top floor, the mega-transaction of 75 percent of the tower equated to a price per square foot of just HK$33,000 ($4,229) per square foot.