Payson Cha’s Hanison Construction Holdings has teamed up with an unnamed investor to buy an industrial building in Hong Kong’s Kwai Chung area for HK$720 million ($92 million), the developer announced Wednesday, as the city’s biggest logistics hub continues to be redeveloped.
Hanison took a 50 percent interest in a joint venture with its anonymous partner to redevelop the Central Industrial Building, located at 57-61 Ta Chuen Ping Street in the Kwai Chung area of the New Territories, which is home to Hong Kong’s largest port facility. The price of HK$720 million equates to HK$4,162 per square foot.
The sellers of the asset are locally-based Park International, Point Base Ltd and Everpeak Creation. While Hanison’s partner in the purchase remains undisclosed, just last week the developer reportedly sold a 50 percent stake in a Cheung Sha Wan office tower to PAG for HK$800 million ($102 million). The private equity firm may have fond memories of Kwai Chung after selling the Success Centre — also on Ta Chuen Ping Street — to investor Tang Shing-bor this past December for HK$1.04 billion ($132 million). However, an account in the Hong Kong Economic Times, citing market sources, indicated that Hanison’s partner in the project was China Merchant’s Group.
Price for Kwai Chung Industrial Building Jumps 75% in 2 Years
Built in 1971, the seven-storey industrial building has a gross floor area of 173,000 square feet, and had been on the market since 2015. The newly announced deal values the industrial asset at 75 percent above the original HK$400 million asking price from more than two years ago, according to people familiar with the deal who spoke with Mingtiandi.
The ageing industrial building sits on a 24,300 square foot site, which can yield up to 230,000 square feet if redeveloped. In 2012, the property was approved by the Town Planning Board to be redeveloped into an 8-storey hotel with 299 guestrooms. However, that permit expired in February 2016 without any work being undertaken.
Hanison, a Hong Kong-listed developer known for its value-added investments, will provide project management and marketing services for the redevelopment of the building. The site is currently zoned for industrial use.
Kwai Chung Spawns New Commercial Space
As Hong Kong’s property market continues to boom, developers are increasingly finding opportunities for profit in building new commercial space, or upgrading industrial assets in Kwai Chung. Hong Kong-based First Group recently soft-launched sales for its new office project K83 in the area, where it is selling office units for HK$10,000 to HK$12,000 per square foot, with the 22-storey office building set to be completed in 2019.
Sun Hung Kai Properties blazed the trail for office developers in the area, by rolling out its Kowloon Commerce Centre (KCC) in 2012. The twin tower complex already houses name brand tenants including Merrill Lynch, China Mobile and the Hong Kong Monetary Authority.
Part of the impetus for Kwai Chung’s transformation comes from the government’s industrial building revitalisation scheme which ran from 2010 to 2016. The scheme exempted owners of the buildings from paying land premiums for converting the buildings to other uses. In 2013, Sun Hung Kai Properties converted the 40-year-old Luen Tai Industrial Building in Kwai Chung into a mall called Life@KCC.