Hong Kong’s Cassette King Marketing North Point Commercial Block After 44% Drop in Value

Hong Kong’s “King of Cassettes” David Chan Ping-chi has put up for tender a commercial block in Hong Kong Island’s North Point area at a price reckoned to be as much as 44 percent below what he was asking for the property four years ago, as the tycoon continues to offload assets amid the city’s property slump.

Said to be facing liquidity challenges according to local media accounts, Chan has appointed CBRE to manage a tender for 321 Java Road, with the agency estimating the building to be worth HK$1 billion. That valuation is a 33 percent to 44 percent decline from the HK$1.5 billion to HK$1.8 billion Chan was reported to be asking for the tower in 2020, when the tycoon tried unsuccessfully to sell the 1985-vintage property.

“With a market value of around HK$1 billion, the average unit price is just over HK$6,000 per square foot,” Avan Pau, senior director of capital markets at CBRE Hong Kong said in a release on Monday. “The asking price has significantly dropped from its peak, and it is expected to attract many institutional users and long-term investors.”

The Java Road property went on the block a day before receivers began marketing a set of 130 shops in Sheung Wan’s Shun Tak Centre which they had seized from Chan and his co-owner, fallen Macau junket boss Alvin Chau Cheok-wah.

999-Year Leasehold

Situated a five-minute walk away from Quarry Bay MTR station at the intersection of Java Road and Healthy Street East, the building formerly known as Phase 1 of Kodak House spans a gross floor area of 153,985 square feet (14,306 square metres) across 13 storeys, along with a basement car park.

At just under HK$6,500 per square foot, the building’s estimated valuation is based on transactions in the vicinity, according to CBRE, which has set the tender submission deadline for 5 December. Chan acquired the asset in 2000 for a reported HK$140 million.

The asset occupies a 999-year leasehold site which commenced its term in 1869 and is permitted for office and commercial use under a permanent waiver.

The property, along with the adjoining Phase 2 of the Kodak House, was developed by Hong Kong-based developer Sun Hung Kai Properties, with the second phase having been sold to investors through strata transactions.

Ferry Terminal Shops

Over in Sheung Wan, receivers have appointed Colliers to manage a tender for the basket of 130 shops on the third floor of the Shun Tak Centre, with that level of the building at 168-200 Connaught Road Central also known as Macau Square due to its direct connection to the Hong Kong-Macau ferry terminal.

The shops collectively span an area of 20,000 square feet (1,858 square metres) and are being sold with some existing tenancies, which include restaurants, health clinics, and beauty companies. Chan teamed up with Chau to acquire the units in 2014 for a reported HK$600 million, with the duo having spent an additional HK$70 million on renovations.

Chau, who founded Macau-based junket operator Suncity Group, is currently serving an 18-year prison sentence after a Macau court in January 2023 found him guilty of criminal association, illegal gambling and money laundering.

Colliers pointed to the property as benefiting from its proximity to major transit points for visitors and locals.

Fire Sales Continue

Chan, who earned his moniker and fortune as the chairman of local tape and film manufacturer Acme Group, has offloaded a string of properties across Hong Kong in recent years, with the asset sales having accelerated since last year as the city’s property slump worsened.

Capital values for grade A office buildings in the city plummeted 41.6 percent from their 2019 peak through 30 June amid weak leasing demand and oversupply, according to a July report by JLL, while values of high street shops plunged 48.9 percent over the same period as sluggish consumer spending and a tepid tourism recovery weighed on retail sales.

Last month, Chan sold his remaining two floors in The Center for HK$1.3 billion after valuations for space in the 73-storey office tower plummeted by more than half since 2017.

Other disposals by Chan and related entities since late 2023 include an office unit in the West Tower of the Shun Tak Centre; a floor in a Quarry Bay industrial building; various shops and retail spaces in Sai Wan, Mong Kok, and Kwun Tong; a shopping centre in Kwai Chung; and a unit in a Tai Po industrial block; as well as a pair of apartments in Happy Valley and Pok Fu Lam.