The top floor of The Center office tower, the tallest building in the portfolio of Li Ka-shing’s Cheung Kong group, is poised to change hands for HK$738 ($94.5 million), smashing the price per square foot record for a strata-titled office floor in Hong Kong.
Under the terms of a provisional agreement announced Thursday to the Hong Kong exchange, Tai United Holdings Limited will sell the entire 79th floor of the grade A skyscraper at 99 Queen’s Road Central to Profit Gate International Limited, a subsidiary of an unidentified company.
The record-breaking purchase of the single floor comes as Li’s Cheung Kong Asset Holdings, which this month changed its name from Cheung Kong Property Holdings, has been working to sell off the prime office asset in what could be a record-setting deal. The Center has reportedly been on the market since August 2016, with an asking price of HK$35 billion ($4.5 billion).
Owner of Vacant Floor to Reap $16.8M From Sale
The selling price for the vacant 13,213 square foot (1,228 square metre) floor equates to HK$55,854 ($7,152) per square foot – the city’s most expensive office transaction per square foot. The proposed transaction surpasses the HK$50,064 per square foot that Henderson Land shelled out for the Murray Road development site in May.
Tai United only held the asset for around half of a year, having announced in January it was purchasing the floor from its own chairman and controlling shareholder, Chua Hwa Por, for HK$536 million. Tai United, a distributor of medical equipment that has branched out into commodities trading, finance and property investment, closed on the acquisition in March and Chua stepped down as company chairman in July and simultaneously left the board of directors.
Tai United expects to book a net gain of around HK$131 million ($16.8 million) from the disposal of the floor.
The top floor of The Center was previously transacted for HK$500 million ($64 million) in June 2016, representing Hong Kong’s most expensive office floor at HK$37,800 ($4,846 per square foot) at the time.
According to market sources who spoke with Mingtiandi, it is rumoured that the most recent sale of the floor is related to the effort by CK Asset Holdings to sell the entire building. The unknown buyer might be attempting to purchase The Center or gain leverage on a potential en-bloc buyer.
Hong Kong’s Richest Man Strives To Sell His Costliest Building
Built in 1998, The Center is the city’s fifth-tallest skyscraper and houses top corporates including Goldman Sachs and Singapore’s DBS Bank. Li’s CK Asset Holdings owns 48 floors of the strata-titled tower, after Malaysian developer Guoco Group acquired 11 floors in 1997. DBS Group Holdings bought nine of those 11 floors the following year, while Cheung Kong sold the 60th and 79th stories in 1999.
Li has disposed of at least RMB 20 billion ($3 billion) of commercial properties in Shanghai, Beijing and Guangzhou since 2013, as the tycoon increasingly shifts his focus to investments in Europe and Australia amid flagging returns in Greater China.
Breaking Price Records in Hong Kong
The disposal of the 79th floor would set a new benchmark for price per square foot in the Hong Kong office market, far surpassing what Joy City Property pocketed for the full 11th floor of Central’s World-Wide House in June. The mainland shopping mall builder sold that floor for HK$601 million ($77 million), amounting to a price of HK$36,003 ($4,616) per square foot.
However, the prize for biggest strata-titled transaction still goes to local developer Hong Kong Resorts International (HKRI), which earlier this month sold the 22nd floor of China Merchants Tower in Shun Tak Centre, Sheung Wan – spanning 24,200 square feet (2,248 square metres) – for HK$750 million ($95.9 million).
Tai United is adding to its Hong Kong investments by dabbling in overseas markets, announcing last year it would form a real estate investment platform in the UK. The Hong Kong-based company made its first British foray last October, buying a set of upscale rental residences in London for £112 million ($140.5 million), and followed that up in November by agreeing to purchase the 10 Hammersmith Grove office building in London from Britain’s Brockton Capital for £103.5 million ($128 million).
Tai United appointed a new board of directors dominated by mainland investors last October, after changing its name from Bestway Holdings earlier in the year.