Hong Kong’s ‘Shop King’ Tang Shing-bor has put a building in Wanchai up for sale at HK$450 million ($58 million), marking the fourth time this year that one of the city’s most prolific property investors has put assets on the block.
The 86-year-old real estate veteran has reportedly entered into negotiations to sell a 13-storey building at 168-170 Hennessy Road to an unnamed buyer, according to local media. While the negotiated asking price represents an 18 percent discount from the HK$550 million that Tang was asking for the property when he put it up for sale in 2018, market observers remain doubtful that the asset can attract buyers at the stated price, given poor market conditions.
The potential sale of the Woon Yin building is the latest in a flurry of attempts this year by the man ranked 14th on Forbes’ Hong Kong rich list to find buyers for properties in his portfolio of shops, go-downs and aging commercial buildings, after having invested in a portfolio of hotels in recent years.
The Shop King’s Liquidation Sale
Tang – affectionately referred to as Uncle Bor in local media reports – purchased the mixed-use asset in Wanchai for HK$300 million in 2016. The 1,900 square foot (176 square metre) mixed commercial and residential building currently earns Tang a rental income of about HK$600,000 per month.
However, industry analysts noted that, given planning restrictions in the neighbourhood, and the plot ratio for the property, there is little capacity for a new owner to develop a larger building on the site, which is expected to limit interest from potential buyers.
In addition to marketing the property on Hong Kong Island, last month Tang was said to have put up for tender a 5,654 square foot site in Ki Lung Street close to the Prince Edward MTR station at an asking price of HK$450 million — a 25 percent discount from an earlier attempt to sell the property for HK$600 million.
In May the veteran investor had put on the market a portfolio of commercial and residential properties for a combined HK$1.5 billion and last month was reported to be in the final stages of negotiating an agreement to sell a 202,361 square foot asset at 17-19 Lok Yip Road in the New Territories for HK$820 million to a unit of state-owned mainland conglomerate China Resources.
Tang’s drive to liquidate assets has been linked to the rapid expansion of his hotel business. In the five years since it was founded, his hospitality-focused Living Group has developed five distinct hotel brands with around 3,300 rooms and 20 restaurant outlets between them.
Like most hotels across Hong Kong these rooms now sit largely vacant due to the pandemic. In February 2020 hotel occupancy in the city fell to 29 percent. Although hotels in Hong Kong had clawed their way back to 44 percent occupancy in June, according to government data, a year ago, the number of occupants was roughly twice that.
With hotel owners hurting, and retail rents falling, Hong Kong’s Shop King earlier this year scrapped a plan to acquire a Mong Kok hotel, forfeiting a HK$32.8 million deposit in the process.
A Buyer’s Market
Tang’s latest deal comes at a turbulent time in Hong Kong’s property market, when both residential and commercial building values are bottoming. On the leasing side, retailers who once competed to secure prime spots in the world’s most expensive market are choosing to postpone leasing negotiations or jump ship altogether, as the disruption from COVID-19 crimps sales.
As vacancies rise, rents have plunged. “We expect high street shops rents to drop 35 percent to 40 percent this year, while prime shopping centre rents will drop 25 percent to 30 percent,” noted JLL’s Hong Kong head of retail Oliver Tong. “Leasing demand will remain weak in the second half of this year due to the ongoing pandemic and economic uncertainties.”
In this environment, the odds seem stacked against Uncle Bor selling his Wanchai block at the asking price.
Outside of retail, JLL expects prices for mass market residential properties to average a drop 5 percent to 10 percent by year’s end, despite a recent rebound in the housing market, as the pandemic, travel restrictions and other barriers limit investor activity.
“Although there is recovery in the residential market, the uncertainties in the property market remain.” said Joseph Tsang, chairman and head of capital markets at JLL. “The city is now facing the third wave of COVID-19 infection and decreasing capital inflow from mainland China to Hong Kong’s real estate market.”