Angelo Gordon, Chellaram’s Aim for 37% Profit Just Six Months After Buying Kowloon Assets

Angelo, Gordon & Co and the family behind the Chellaram trading and transport company are offering to sell a set of three office floors in Kowloon East for around 37 percent more than they paid to purchase them in January of this year, in the latest milestone for Hong Kong’s office investment market.

The New York-based property fund manager and its local partner are asking HK$1.27 billion ($161.89 million) for the top three floors of the C-BONS International Centre on Wai Yip Street in Hong Kong’s Kwun Tong area of Hong Kong’s Kowloon East — a price equivalent to HK$22,000 per square foot for the strata title assets.

The price per square foot is 37.5 percent higher than the HK$16,000 per square foot that the investment partners paid to purchase nine upper floors in the 26-storey commercial building from mainland consumer products maker C-BONS Group for HK$2.5 billion in the first month of the year.

Joining Hong Kong’s Strata Title Stampede

Angelo, Gordon and Chellaram’s are making their office floors available at a time when the market for office units has seen prices reach new records in many parts of the city.

“The trend of strata title assets sales has stirred up since last year,” said William Liu, Senior Director for Capital Markets and Investment Services at Colliers International in Hong Kong. “When small or medium-sized firms began to opt for relatively decentralised areas such as Kwun Tong to invest in or set up branches due to its more affordable and bigger offices comparing to those in traditional Grade-A commercial buildings.”

Angelo, Gordon & Co and the Chellarams’ have not spoken directly about the timing of the proposed sale and inquiries from Mingtiandi to Angelo, Gordon representatives went unanswered at the time of publication.

Speaking to the local media, representatives of CBRE and Centaline, which have been retained as joint sole sales agents for the property, said the connecting 26th, 27th and 28th office floors in the Grade-A commercial building had an average area of 19,202 square feet (1,784 square metres), and that together the assets provided 57,606 square feet of space.

Office Assets Fetching Record Prices in Hong Kong

Colliers Liu said the move to resell the properties only six months after purchase was not unusual, given the high demand for offices in the district and relatively low supply of available strata title assets.

The veteran broker expressed confidence that the harbour-view offering, which also comes with a total of nine parking spaces on the second floor and two rooftop advertising signs, would be appealing to potential buyers.

Big mark-ups over short time periods have become increasingly common in Hong Kong’s strata title market, with local investor Jeffrey Liu Wai-lun having sold a unit in Admiralty’s Lippo Centre Tower Two less than a month ago for HK$52.01 million — some 30 percent more than he had paid to purchase the space in March.

In May, Prosper One Holdings sold a floor in Central’s World-Wide House for for approximately HK$735 million — a price 22 percent over what the investment firm had paid to purchase the asset 10 months prior.

When Industrial Becomes Commercial

With the government’s aim to revitalise the city’s Kowloon East area from its industrial past, more companies have moved into the former manufacturing base, such as Singapore’s biggest bank DBS, which decided to move its headquarters to Kwun Tong’s Two Harbour Square back in April.

C-BONS Group bought the highest 10 floors of C-BONS International Centre from developer Sun Hung Kai in 2010 for HK$1.07 billion.